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

Company Law (en cours)

Pursuant to Article 1843-3, para. 2, of the Civil Code, a contribution of property is characterized by the transfer to the company of the ownership of the contributed asset and its effective availability to the latter. The transfer of ownership of the asset to the company implies that it becomes the holder of all the rights previously held by the contributor, who no longer holds them. This is prec …

Terms of the contribution of property

Pursuant to Article 1843-3, para. 2, of the Civil Code, a contribution of property is characterized by the transfer to the company of the ownership of the contributed asset and its effective availability to the latter. The transfer of ownership of the asset to the company implies that it becomes the holder of all the rights previously held by the contributor, who no longer holds them. This is precisely how a contribution of property differs from other types of contributions, such as contributions in enjoyment .

On the other hand, this form of contribution closely resembles a sale. Indeed, as in the latter, in the case of a contribution of ownership, the contributor is bound to the company by certain warranties, such as the warranty against dispossession or the warranty against latent defects . The contributor also transfers, as in a sale, the ancillary items of the property, so that a company to which a building is contributed is entitled to bring an action for warranty against the engineer responsible for its construction .

However, in the case of a sale, the seller receives in exchange for their property a sum in cash   whereas in the context of a contribution of ownership, they receive shares, whose value may fluctuate . Moreover, the contributor, who does not have the status of a seller, cannot benefit from the seller's privileges such as a possible rescission for lesion .

The contribution of property can serve as a means for the contributor to conceal elements of their assets and shield them from creditors. In such cases, creditors have the right to seek the nullity of the contribution and its reintegration into the debtor's assets. It has been held that the contribution of a jointly owned property by spouses to a real estate civil company (SCI) after the date of cessation of payments is subject to nullity when it is demonstrated that the spouse subject to collective proceedings did not receive proportional shares in return .

Finally, the transfer of ownership of the contributed asset is only effective from the date of the company's registration in the trade and companies register. It is indeed from this date that it acquires legal personality, allowing it to hold its own assets.

Cass. com., 6 December 1982, LawLex202200003092JBJ, ruling that the contribution of a business concern to a SARL created with third parties, in exchange for the assumption by the latter of existing debts to the bank, is classified as a contribution of business assets and not a contribution in usufruct when the contributor has deregistered their activity from the commercial register to become an employee of the company, while the company has registered as the owner of the business concern.

Cass. 3e civ., 23 March 1968, LawLex202200003639JBJ.

Cass. com., 9 March 2022, LawLex202200003639JBJ, considering that the contribution of ownership, by the partners of a first company, of all their shares in exchange for stock warrants and convertible bonds in a second company, is not classified as a sale.

Cass. req., 12 June 1945, LawLex202200006674JBJ, concerning the refusal to apply to the contributor of a building the benefit of rescission for lesion exceeding seven twelfths.

Cass. com., 3 May 2011, LawLex202100003695JBJ.

Company Law (en cours)

20. Terms of the contribution of property

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Les notions juridiques connexes

20. Terms of the contribution of property

Demandez un accès gratuit au contenu exclusif Livv – juristes d’entreprise

Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

Demandez un accès gratuit
au contenu exclusif Livv – juristes d’entreprise