Incorporation of companies in France: the complete guide for SME managers (by Maître Guillaume Leclerc, business lawyer)

Introduction: why setting up a company is a strategic step for an SME manager

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Setting up a company is not a simple administrative formality: it is a structuring choice that will impact your taxation, your personal responsibility, your ability to raise funds and transfer your business. In practice, a well-incorporated company facilitates your relationships with banks, investors, business partners and even your employees, because it sends a signal of solidity and legal seriousness.

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What is a company constitution?

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Establishing a company consists in creating a legal entity distinct from its partners by following a set of legal acts (statutes, capital deposit, registration, etc.) provided for in the Commercial Code and the Civil Code. This birth of a new entity implies the combination of several constituent elements (contributions, affectio societatis, participation in results, etc.) and compliance with formalities at the one-stop shop for companies to obtain registration with the RCS.

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Society: legal definition and practical challenges

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A society is a structure in which several people (or sometimes only one) pool goods or their industry in order to share the profit or benefit from the resulting economy, while bearing the losses. Concretely, this means that the company has its own assets, its name (corporate name), its head office, its corporate purpose, which makes it possible to distinguish your personal assets from those of the company and to limit, depending on the form chosen, the exposure of your private assets.

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The 4 constituent elements for the constitution of a company

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Conventionally, the constitution of a company is based on four pillars:
• Contributions made by the partners (cash, nature, sometimes industry).
• The desire to collaborate in a stable way, the affectio societatis (desire to “make society”).
• Participation in results: sharing profits and contributing to losses, organized in the statutes.
• A legal and determined corporate purpose, which legally regulates your activity and your managerial powers.

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Concrete example: two partners create a digital strategy consulting company; one provides €20,000 in cash, the other a software valued at €30,000 and undertakes to devote 3 days a week to the activity; the statutes provide for 50/50 profit sharing, a corporate purpose centered on digital strategy advice and governance in the form of an SAS.

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How is a company formed? The main steps

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Setting up a company in France follows a well-defined path, which can however become tricky without support, especially for SMEs with several partners or rapid growth projects. The main steps are: definition of the project and the arrangement, choice of the legal form, drafting of the articles of association, filing of the share capital, publication of the notice of constitution, filing the application at the one-stop shop and obtaining registration.

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Step 1: Define the project and the legal framework

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Before drafting articles of association, it is essential to clarify: the exact nature of the activity, the partners involved, the distribution of capital, financing needs and the desired tax regime. For example, an agricultural company project with a need for significant bank financing does not involve the same choices as a consulting activity carried out by two complementary partners who want to remain flexible in terms of the entry of investors.

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Step 2: choose the right legal form

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The choice between SAS, SARL, SA, civil society, agricultural company, etc., must be guided by the size of the project, the number of partners, the degree of flexibility sought and your asset objectives. A common mistake for managers is to choose a “fashionable” form (SAS) without measuring the implications on their social protection, governance or the entry of future investors into capital.

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Step 3: write the company's articles of association

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The articles of association are the founding contract of the company: they define the rules of the game between partners and the powers of the manager. In particular, they must mention the form, duration, name, name, corporate purpose, corporate purpose, head office, share capital and its distribution, collective decision-making rules, conditions for the transfer of shares, the appointment and powers of managers.

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Example of a (simplified) clause for the sale of shares in SAS

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“Any transfer of shares to a non-associated third party is subject to the prior approval of the collective of partners, acting by a simple majority of the votes at their disposal. In the absence of approval, the partners undertake to acquire or have acquired the shares under the conditions proposed by the transferor, within a period of three months.”

For To deepen the question of the initial drafting of the articles of association (SAS, SARL, SCI, etc.), you can consult the complementary article: drafting company statutes.

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Step 4: build and deposit the share capital

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The partners deposit the cash contributions into a blocked account (bank, notary or receivership lawyer) and, if necessary, have the contributions in kind evaluated (often with a contribution auditor). A capital deposit certificate is issued; it is essential to finalize the registration of the company and to mention the share capital in the notice of establishment.

Step 5: advertising and registration formalities

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A legal announcement must be published in an authorized medium, then a complete file is submitted to the one-stop shop (signed articles of association, capital deposit certificate, proof of seat, identity documents, identity documents, declarations of the manager, etc.). Once registered, the company obtains its Kbis extract which materializes its legal personality and allows it to act, open a permanent bank account, issue invoices and conclude contracts.

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What are the main types of companies for an SME?

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SME managers often hesitate between SAS, SARL, sometimes SA for more ambitious projects, not to mention specific structures such as agricultural or civil real estate companies. Each form has advantages but also constraints in terms of responsibility, the social regime of the manager, taxation and governance.

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SAS: flexibility and attractiveness for investors

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Simplified joint stock companies (SAS) are very popular because their share capital is freely fixed (theoretically from €1) and their governance can be largely customized in the articles of association. It is particularly suitable for growth projects, fundraising and arrangements involving several categories of partners (founders, investors, managers) thanks to the possibility of creating preferred shares, partner pacts and sophisticated exit clauses.

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The SARL: a more protective framework for small structures

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The limited liability company (SARL) offers a more standardized framework, often reassuring for family or small partners, with liability limited to contributions and a status of majority manager affiliated to the self-employed regime. Its share capital is freely fixed, but its governance is more regulated by law, which can limit statutory creativity but also reduces the risk of imbalances between uninformed partners.
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SA and more specialized forms

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A public limited company (SA) is designed for large-scale projects, with a minimum share capital of €37,000 and structured governance bodies (board of directors or management board and supervisory board). Other forms exist for specific needs, such as companies limited by shares (with minimum capital and duality between limited partners and sponsors) or civil companies (real estate, asset, liberal professions) which obey specific regimes.

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What is the minimum capital to create a company?

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For most commercial companies (SARL, EURL, SAS, SASU), the law no longer sets a minimum capital: it can theoretically be €1, which can be attractive but can also damage credibility with financial partners. On the other hand, some forms still require a minimum share capital, such as an SA or a limited partnership by shares, with a threshold of €37,000 (or even more in the event of a public offering of shares).

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Free social capital: opportunity or trap?

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Too low capital can complicate obtaining a loan, arouse reservations from your suppliers and give a fragile image of your company, especially in capital-intensive sectors (construction, industry, tech hardware). Conversely, relevant capital, even modest, reassures your interlocutors and structures the distribution of powers between partners, especially if you combine cash contributions, strategic contributions in kind and preferred action mechanisms.

Example of a pragmatic definition of capital

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For a consulting SME that starts with an estimated annual expenses of €150,000, an initial capital of €20,000 to €40,000 can be a reasonable signal, complemented by bank financing or contributions to an associate's current account. In an agricultural or industrial company, the level of capital will generally need to be higher to finance initial investments and reassure the bank that you are able to bear start-up losses.

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Company constitution: legal points of vigilance for an SME manager

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Beyond the forms, the constitution of a company raises major legal issues: distribution of capital, powers of the manager, exclusion clauses, exit clauses, brand and intellectual property protection, etc. These aspects condition the control of your company in the medium term, especially if you are considering the entry of investors, the arrival of new partners or a family transfer.

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The essential clauses of the statutes that should not be overlooked

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For an SME, the following clauses are particularly sensitive:
• Approval clause in the event of the transfer of shares, to control the entry of new partners.
• Exit clauses (tag along, drag along, promises to buy/sell) often inserted in a partners' agreement completing the articles of association.
• Clauses for the exclusion of a partner in the event of a serious breach, which must be carefully supervised to avoid nullity or litigation for abuse of majority.
• Clauses relating to executive remuneration, distribution of dividends and reserves to secure cash flow.

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Jurisprudence and frequent litigation risks

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Litigation practice shows numerous disputes concerning the validity of meetings, the contestation of decisions to increase capital, or the implementation of exclusion clauses considered unfair. Likewise, the insufficient definition of the corporate purpose or the powers of the manager may lead to the nullity of acts or to the questioning of the personal responsibility of the manager, in particular towards third parties.
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Educational framework: frequent error by an SME manager

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A typical case: two partners create a SAS without a partners' agreement, with 50/50 capital and standard statutes downloaded online. A few years later, a partner wanted to sell his shares to a third party; in the absence of a well-structured approval clause, the manager found himself stuck between the buyer's wishes, the reluctance of the other partner and the absence of a valuation mechanism, which led to a dispute paralyzing the company for several months.

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Creating a company quickly: room for manoeuvre and limits

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The digitization of formalities now makes it possible to create a company quickly, sometimes in a few days if the file is complete and the articles of association are already ready. However, aiming only for speed involves a risk: neglecting contractual structure and taxation in favor of standardized models that do not take into account the specificities of your project or your partners.

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Creating an online company: platforms and the role of the lawyer

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Online company creation platforms offer industrialized solutions for drafting articles of association, depositing capital and formalities, with an attractive cost and rapid execution. The lawyer's role is then to secure or adapt these documents (statutes, partners' agreements, management fees agreements, commercial contracts) so that they correspond to your governance strategy, your contractual environment and the specific risks of your sector.

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Setting up an online company as a non-resident

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A tax non-resident may, under certain conditions, set up a company in France, but must anticipate the constraints associated with opening a professional bank account, anti-money laundering requirements and, where applicable, with a residence permit. In practice, banks are more cautious and it may be appropriate to use the deposit of capital via a notary or a lawyer (receivership account) and to verify the fiscal impact of the envisaged structure in the State of residence.

Creation of a SAS company: practical focus

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The creation of a SAS company is often preferred by SME managers for its flexibility, especially in terms of governance and capital distribution. The share capital is free, but a level consistent with the business plan and financing needs reinforces the credibility of the company with banks and investors.

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Key steps in setting up a SAS

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• Drafting of tailor-made statutes (organization of powers, decision-making procedures, approval clauses, preference actions, etc.).
• Deposit of share capital (at least 50% of cash contributions paid upon establishment, with the possibility of releasing the balance over several years).
• Appointment of the president (and possibly additional bodies: DG, committees) and formalization of his mandate.
• Publication of the legal announcement and registration with the RCS via the one-stop shop.

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Example of governance organization in SAS for SMEs

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In a consulting SAS with three partners, the articles of association may provide for a founding president in charge of operations, a strategic committee composed of the three partners, a double voting clause for the partner who contributes the most capital, and preferred shares giving the right to a priority dividend for investors. This statutory granularity must be handled carefully to avoid subsequent imbalances and requires legal engineering work beforehand.

Creation of an agricultural company: specificities

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The creation of an agricultural society is subject to specific rules, in particular with regard to rural leases, public aid, social security schemes and land ownership. The main structures encountered are GAEC, EARL and sometimes civil or commercial companies adapted to agricultural operations, each presenting a specific balance between responsibility, taxation and governance.

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Points of attention for an agricultural society

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The establishment of an agricultural company involves verifying the conditions of approval (GAEC), the compatibility of contributions in kind (land, buildings, equipment) and the impact on basic payment rights and other aids. It is also essential to properly articulate existing rural leases, operating agreements and capital structure to avoid bottlenecks in the event of the departure of an operating partner.

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Creating a consulting company: intellectual property and responsibility issues

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The creation of a consulting company is often part of activities with high intellectual added value, with few material assets but a decisive human capital. The statutes and ancillary contracts must therefore carefully deal with the ownership of the deliverables, competition, confidentiality, as well as the professional liability regime and the insurance to be taken out.

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Legal structure of a consulting company

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An SAS is often preferred for its flexibility and the possibility of bringing in associate consultants while maintaining a hard core of control. It is useful to supplement the articles of association with service agreements, confidentiality agreements, client non-solicitation clauses and vesting mechanisms for shares awarded to key managers.

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How to create a company in France when you are a non-resident?

A tax non-resident or a foreigner may, under certain conditions, create a company in France, but must respect the rules relating to the right of residence, the specific authorizations that may be required for certain activities, and tax obligations. Some regimes, such as microenterprises, can be opened subject to conditions, but generally assume an address in France for the seat of the activity.

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Specific approaches and practical difficulties

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The main difficulties relate to the opening of a professional bank account, the domiciliation of the head office and the reinforced controls related to the fight against money laundering (TRACFIN) and the financing of terrorism. In practice, it is common to anticipate these issues by using a lawyer or a notary to deposit capital, by preparing a solid file for the bank and by verifying the tax treaties applicable between France and the State where the founder is resident.

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Company creation: price and budget to be expected

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The cost of setting up a company varies according to the complexity of the set-up, the form chosen, the use or not of a lawyer and the costs of filing, publishing and drafting acts. At the same time, share capital is not a cost in the strict sense but an investment in society, which is different from legal and administrative costs.

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Main cost items

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• Publication of the legal announcement and registration fees.
• Possible fees for the drafting of statutes, partners' agreements, agreements, project audit.
• Possible fees of the auditor for significant contributions in kind.
• Bank and direct debit fees.

Creating a self-employed or micro-enterprise business: an alternative to setting up a company?

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The auto-entrepreneur (microenterprise) regime allows you to carry out an activity in your own name with great ease of creation and management, but without setting up a separate company. It is suitable for low-volume activities, with turnover ceilings and personal liability that are more exposed than in a limited liability company.

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When should company formation be preferred to microenterprises?

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A manager who wishes to welcome partners, structure a strong brand, separate his personal and professional assets or raise funds should give priority to the constitution of a company (SAS, SARL, etc.). The microenterprise regime may be relevant for testing an activity or providing an ancillary service, but it quickly shows its limits for an ambitious SME.

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Summary table: main types of companies for an SME

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Here is a summary table, in HTML embed, comparing several common forms of companies for an SME manager:

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FAQ: company constitution and frequently asked questions from SME managers

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What is a company constitution?

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The constitution of a company corresponds to all the acts and formalities allowing the creation of a legal person distinct from its partners, with its own assets and registered in the Trade and Companies Register. In particular, it includes the drafting of the articles of association, the fixing and filing of the share capital, the appointment of the manager, the publication of a notice of constitution and the filing of a complete file at the one-stop shop.

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How is a society formed in practice?

To incorporate a company, you must: define your project and the legal form, draft the articles of association, file the share capital, choose and justify a seat, publish a legal announcement and file the registration file. Once the Kbis extract has been issued, your company legally exists and can conclude contracts, open a permanent bank account and hire employees.

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What are the 4 components of a company?

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The four fundamental legal elements are:
• Contributions (cash, nature, industry) provided by the partners.
• Affectio societatis, that is, the desire to collaborate on an equal footing for a common project.
• The sharing of results (profits and losses) organized by the statutes.
• A legal and determined social object, which frames the company's activity.

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What is the minimum capital to create a company?

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For SARL, EURL, SAS and SASU, no minimum share capital is imposed by law: it can theoretically be €1. On the other hand, certain forms such as an SA or a limited partnership by shares require a minimum capital of €37,000, which may be higher in the event of a public offering of shares.

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How to create a company quickly?

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To create a company quickly, it is crucial to prepare the articles of association, proof of seat, capital deposit and all the necessary documents in advance, then to go through the one-stop shop or an online platform that centralizes the formalities. However, even in an accelerated process, it is still strongly recommended that the articles of association and, where appropriate, a partners' agreement be reviewed by a lawyer to avoid that speed translating into litigation risks in the medium term.

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How to create an online company?

The creation of an online company consists in using a dematerialized service to generate the articles of association, deposit the capital, publish the legal announcement and transmit the documents to the one-stop shop. This solution reduces travel and can speed up deadlines, but requires being very vigilant about the quality of the standard statutes offered, which must often be adapted to your specific situation (governance, entry/exit of partners, taxation).

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How to create a company in France when you are not a resident?

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A non-resident may create a company in France subject to complying with the rules on residence, having a registered office address in France and meeting applicable fiscal and social obligations. The main practical obstacles relate to the opening of a professional bank account, domiciliation and reinforced verification by financial institutions and supervisory authorities, which justifies professional support.

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How to create a consulting company?

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To create a consulting company, it is necessary to precisely define your services, your positioning and your target customers, then to choose a flexible social form (often an SAS) to welcome future partners or managers. The statutes and ancillary contracts should provide for the ownership of the deliverables, the protection of your methods, non-competition and confidentiality clauses, as well as a clear policy for remuneration and distribution of results.

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How to open a company in France in practice?

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Opening a company in France involves choosing a legal status, drafting your articles of association, defining and filing your share capital, setting up a registered office address (domiciliation, commercial lease or professional lease), then submitting a complete registration file. At the same time, you must anticipate the tax regime (IS, possibly a temporary IR option), the social protection of the manager and the professional insurance necessary for your activity (pro, decennial liability, etc.).

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How to reconcile the creation of a company and the status of self-employed person?

It is possible to first operate in a microenterprise to test an activity, then to incorporate a company when turnover and structuring needs increase, provided that the rules of accumulation or transformation are respected. A frequent strategy consists in switching to a company (SAS or SARL) as soon as the activity becomes sustainable, when an associate joins the project, or when customers require a more “professional” structure to contract.

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Regulated matter and the importance of legal assistance

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Company law, in particular company incorporation, is a regulated matter that interacts with many other areas: taxation, employment law, banking law, contract law, sectoral regulations, etc. Assistance from a lawyer makes it possible to anticipate risks, to draft articles of association and partners' agreements adapted to your project and to secure your relationships with banks, investors, partners and administrations.

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Article written by Guillaume Leclerc, lawyer in commercial contracts and commercial litigation in Paris.

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