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

Company Law (en cours)

Contributions in the form of services are not permitted in all companies. Allowed in SAS , SARL , SCP, or certain joint ventures, they are, however, prohibited in SA and SCA.
Article 1843-2, para. 2, of the Civil Code states that contributions in the form of services do not contribute to the formation of corporate capital but result in the allocation of shares entitling the holder to a share of pr …

Characteristics of contributions in the form of services

Contributions in the form of services are not permitted in all companies. Allowed in SAS , SARL , SCP, or certain joint ventures, they are, however, prohibited in SA and SCA.

Article 1843-2, para. 2, of the Civil Code states that contributions in the form of services do not contribute to the formation of corporate capital but result in the allocation of shares entitling the holder to a share of profits and net assets. Unless otherwise provided by the articles of association, the value of the shares of the contributor of services is equal to that of the associate who contributed the least, in accordance with Article 1844-1.

A partner who wishes to participate in a company and who has neither capital nor assets to contribute, or who does not wish to contribute them, can choose to make available to the company their skills, expertise, or work. In this case, they make a contribution in the form of services. Confusion may arise from this type of contribution between the role of the partner contributing services in the company and that of an employee. However, the essential affectio societatis of the contributor and the absence of a subordinate relationship allow them to be distinguished.

The contribution in the form of services must be expressly provided for in the articles of association: when this is not the case, partners cannot rely on their participation in work to benefit from an additional share of profits . The contribution in the form of services represents a genuine contribution, just like contributions in cash and in kind. Also, the dissolution of a professional civil company is not required simply because there is only one partner holding shares, as long as a partner holding shares in the form of services remains among its members . Furthermore, the contribution in the form of services constituted by the work of a cohabitant on the property belonging to his partner can establish the existence of a de facto company . Conversely, the mere, unsubstantial intermediation of a person in the purchase of a single lot of goods is not characteristic of a contribution in the form of services that could justify the creation of a de facto company .

Cass. com., 14 December 2004, LawLex202200003578JBJ.

Cass. 1re civ., 30 March 2004, LawLex202200003579JBJ.

Cass. 1re civ., 19 April 2005, LawLex202200006422JBJ.

Cass. com., 12 July 1993, LawLex202200006421JBJ.

Company Law (en cours)

26. Characteristics of contributions in the form of services

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Les notions juridiques connexes

26. Characteristics of contributions in the form of services

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Les notions juridiques connexes

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