All of French Company Law: ordinary law of companies and specific regime for different types of companies

Company Law (en cours)

A contribution in kind may be limited to a transfer of enjoyment. The contributor who makes a contribution in enjoyment does not relinquish ownership of their property to the company but merely allows it to be freely used for a specified period. Therefore, the proposal to amend the articles of association of a joint venture company, which requires the continued availability of hotel units contribu …

Characteristics of contributions in enjoyment

A contribution in kind may be limited to a transfer of enjoyment. The contributor who makes a contribution in enjoyment does not relinquish ownership of their property to the company but merely allows it to be freely used for a specified period. Therefore, the proposal to amend the articles of association of a joint venture company, which requires the continued availability of hotel units contributed by the partners for enjoyment, must be unanimously approved as it affects the free disposition of these assets and increases their commitments .

The intention to contribute a property in enjoyment can be express. If it is not and a dispute arises regarding the ownership of the property, the judge must analyze the facts and seek the intention of the contributor. Indeed, when, in a joint venture, the terms of a clause imply the prohibition of alienating the business assets without the agreement of both partners, as well as a right to share its value upon the dissolution of the undertaking, the heir of one of the deceased parties cannot claim ownership of the property since the contentious clause establishes the partners' intention to contribute it in enjoyment .

The contribution may involve any assets capable of being transferred, such as real estate, goods, the operation of a television channel , marketable securities, but not a legal action .

The situation of the contributor of a contribution in enjoyment of a property is similar to that of a lessor vis-à-vis their tenant. Article 1843-3, para. 4, of the Civil Code provides that when the contribution is in enjoyment, the contributor is liable to the company as a lessor is to their lessee. However, the contributor in enjoyment, who receives shares in return for their contribution, does not have all the prerogatives attached to the status of a lessor. Thus, a partner in a limited liability company (SARL), who contributes a business asset in enjoyment, is not entitled to demand its return from the operator for failure to operate  .

Article 1843-3 also specifies that when the contribution involves fungible goods or any other assets normally expected to be renewed during the duration of the company, the contract transfers ownership of the contributed assets to the company, with the obligation to return a similar quantity, quality, and value.

The contribution in enjoyment, although less common, offers several advantages compared to the contribution in ownership. First, the contributor is assured of recovering their asset upon the dissolution of the company. Additionally, if the company is subject to collective proceedings, their contribution, which has never been part of the company's assets, is excluded from the creditors' pledge and can be claimed.

Cass. com., 20 December 2017, LawLex202200003200JBJ.

Cass. com., 15 May 1973, LawLex202200003182JBJ.

Cass. com., 19 June 2019, LawLex202200009436JBJ.

Cass. com., 31 May 2005, LawLex202200003098JBJ considering that a legal action cannot be the subject of a contribution in enjoyment remunerated by the allocation of shares in a joint venture.

Cass. com., 3 December 1991, LawLex202200003193JBJ.

Company Law (en cours)

21. Characteristics of contributions in enjoyment

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21. Characteristics of contributions in enjoyment

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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au contenu exclusif Livv – juristes d’entreprise