SETTING UP AND RUNNING A COMPANY IN FRANCE

You have made the decision to set up a company in France?  Enter France’s team has helped hundreds of foreign companies establish in France.

WHAT ENTER FRANCE DO ?

ENTER FRANCE will help you quickly get through the hassle of establishing a business. We will be by your side 24/7. From the outset, our services will be tailored to your needs.

Our aim is to accompany you from the start by advising you on your business strategy, your settlement, finding the right partners and also giving you assistance in the sometimes tedious and time consuming process of administrative formalities. We will help you avoid the trial and error phase as well as the potential cultural and linguistic clash experienced by foreign business starters in France. We will put you on the right track from the start as well as smoothen the road all the way to your final destination.

ENTER FRANCE will be your one and only stop shop for setting up your activity in France.

If it is up to you make money, it is our business not to make you lose any, particularly at the beginning of your project.

Contact us and we will take care of everything. You will be running your business in France in no time. And no doubt you will tag ENTER FRANCE as your business starter’s best friend.

A GUIDE TO COMPANY FEATURES

Whether talking about taxes, restrictive financing or employment laws, the common assertion has long been that France could be a nightmare for business starters.

If globally, France is standing 32nd in the ranking of 189 countries regarding the ease of starting a business (Ernst & Young, 2003), consultants found that in some ways, France actually leads the world in making it simple and efficient for entrepreneurs to get a venture off the ground.

For example, France ranks above all other G20 countries when it comes to education and training’s contribution to businesses.

It’s actually far easier to start up a business in France than you may think, and in some ways, the French are leading the way for simplicity and efficiency.

More specifically, France has lately taken many steps, making it easier to start a business, using streamlining procedures such as a one-stop shop business registrar (Les Centre des formalités des entreprises). Thus, making procedures simpler, faster, and reducing, or in some cases, eliminating minimum capital requirements.

France has also undertaken a business registration reform, unfolding in many stages, which is part of a larger regulatory reform program. Benefits include greater firm satisfaction and extra savings, more registered businesses as well as more financial resources and job opportunities.

France strives to implement state-of-the art digital technology and get administrations online. It only takes around 15 minutes to fill in your taxes forms online in France and it is also free, unlike in the US where you have to pay for the services of a private company.

This is confirmed by Ernst & Young’s report, which found only five administrative steps needed to start a business in France, in comparison to an average of 7.6 among other G20 countries.

Aiming to stay on the right tracks by promoting a competitive investment environment, French laws provide a wide range of corporate vehicles, allowing each investor to pick and choose according to its needs and objectives. The incorporation process is quick and easy and rules for non-listed companies offer a high degree of freedom and flexibility.

The main types of Limited Liability Companies (LLCs) are detailed below. In addition, European law has introduced a new type of LLC, known as the Societas Europaea (European Company), which is specifically tailored for businesses operating in multiple EU Member States.

But first, the primary decision is to determine which legal vehicle will be the most suitable for your business. It could be a branch of a foreign company, which would then become the French arm of your existing company, or another option is the incorporation of a brand new private company.

Setting up a branch of a foreign company in France (succursale)

When looking to settle in France, a foreign company may choose to set up a branch. At first, it is noteworthy that this vehicle has no separate legal personality per se.

In short, using a branch involves conducting activities from an address in France through permanent representatives authorized by the foreign company to deal with third parties and legal proceedings.

In other words, the branch can have its own staff to manage its business in France.

You must bear in mind that a branch will not be a separate legal entity but rather an extension of the foreign company with a clear link to it. In that respect, if the branch encounters financial difficulties, the parent company bears unlimited liability for its debts.

Setting up a French company per se (filiale)

However, when considering business, legal or taxation strategies, you may wish to incorporate a fully independent corporate arm of your existing company. You can indeed choose to set up a whole new brand company.

There are a number of different limited company business structures which can be set up in France. But in any case, all French limited companies must be legally registered with the official Registrar of Companies (Registre du commerce et des sociétés).

The most common type of company in France is the Private Company Limited by Shares. This type of company is owned by shareholders, managed by directors and created with the intention of making a profit. These profits can then be reinvested in the company or distributed among the owners as dividend payments.

There are a number of benefits which make limited companies such a popular choice of business structure, most notably, the limited financial liability it provides for company shareholders. Indeed, their financial liability is limited to the value of their shares, which means that limited company owners are not personally liable for any business debt beyond the value of their shares.

The most popular categories are the following:

  • Société Anonyme (SA)
  • Société par Actions Simplifiée (SAS)
  • Société à Responsabilité Limitée (SARL) : (Private Limited Liability Company)
  • Société Anonyme (SA)

The SA is a Private Limited Liability Company type.

This corporate form is ideal for large businesses which can sell shares publicly. Public Limited Companies are very similar to Private Companies Limited by Shares, with one main difference; shares are made available for the general public to purchase.

Subject to some legal and capital threshold requirements, (SA) can also have its shares listed and traded on a Stock Exchange.

The essential features of this corporate vehicle is that it must have at least 7 shareholders and a minimum share capital of €37,000, whereas there is no capital requirement for the other corporate forms.

There are two types of directorship:

 

1) First, a board of directors (from 3 to 18 directors) headed by a chairman. The board:

  • Determines the business strategy of the company;
  • Ensures the strategy is implemented and;
  • Undertakes the necessary controls and verifications.

The day-to-day running responsibilities of the company is entrusted to a managing director (directeur général) (and deputies, if any), who may also be the chairman of the board.

 

2) The second directorial form is a two-tier structure which strengthens the overview and the scrutiny powers of the shareholders:

  • The first tier consists of a directoire (1 to 5 members in private companies or 1 to 7 members in public companies), which manages the company, and
  • The second tier is composed of a supervisory board (3 to 18 members), which appoints the directoire members and oversees their actions. Certain powers may also be specifically reserved for the shareholders.

Société à Responsabilité Limitée (SARL)

The SARL is a Private Limited Liability Company tailored for small and medium-sized businesses. Indeed, it only requires one shareholder (with up to a maximum of 100 shareholders) and no minimum share capital. Share transfers are restricted by law and/or the articles of association.

The management structure is quite simple: one or more general managers (gérants) (who do not have to be shareholders) have extensive powers to perform all acts on behalf of the company. Here again, the duties and powers of the managers can be limited either by law or by the articles of association.

Société par Actions Simplifiée (SAS)

The SAS is a Limited Liability Company often used for holding companies or joint ventures. But the shareholders needn’t be legal entities and the capital can also be held by individuals.

Therefore, a foreign company can be the sole shareholder of an SAS. However, its shares cannot be traded on a stock exchange but can be transferred freely, subject to any transfer restrictions, as may be provided for in the articles of association.

However, unlike the SA, it has no minimum number of shareholders and no minimum capital requirement. Thus a SAS can be held by only 1 shareholder. It is called “Société par actions simplifiée unipersonnelle” (SASU).

The SAS management structure is very flexible, the sole legal requirement being that the SAS must be represented by a president. If the president of the SAS is a legal entity it must be represented by one of its authorized individual representatives.

Apart from this requirement, the shareholder(s) can freely decide on the managerial structure of the company in their constitution (e.g. several managers with equal power or an executive committee to approve certain management decisions).

Because of the large degree of flexibility of an SAS, the articles of association must be drafted carefully.

Transfers of shares in an SAS are easy and unrestricted, unless the articles of association provides otherwise.