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

Company Law (en cours)

Article L. 210-6 of the Commercial Code provides that when the company takes over commitments made during its formation period, these are deemed to have been fulfilled by it from the outset. This is the first consequence of the takeover of acts. In fact, commitments made in the name of a company in formation are taken over with retroactive effect from the date of its registration, which grants it  …

Effects

While the signing of the articles of association marks the creation of the company, it does not, however, confer legal personality, which still requires initiating the registration process. However, a long period may elapse between the date of signing the articles and the effective registration of the company. The company may need to contract as soon as possible with various suppliers to acquire the goods and services necessary for the deployment of its activity or to undertake the necessary steps to ensure its start-up. This raises the question of the fate of acts performed before acquiring legal personality. Articles 1843 of the Civil Code and L. 210-6 of the Commercial Code indicate that the company, once duly formed and registered, can assume the acts performed in its name during its formation period, from the signing of the articles . Particular attention must be paid to the terms used. Indeed, the assumption applies to all acts, obligations, and commitments. Does this mean that any commitment can be assumed? The Court of Cassation answers in the negative, considering that a request for an operating permit, emanating from an agricultural group, does not constitute a commitment within the meaning of Article 1843 .

For a long time, the case law considered that the only acts that could be taken over were those concluded in the name and on behalf of the company being formed . Indeed, a loan agreement concluded not in the name and on behalf of a company being formed but by the company itself, before its registration, is void for having been concluded by a company lacking legal personality . The founders of a company in the process of being formed had to have acted expressly on its behalf . Consequently, the takeover of a lease by a company was not enforceable against the lessor when the contract had not been concluded in its name, but in the name of the founders, with the “option to substitute the [company] being formed” . The requirement for such strict formality was originally intended to protect the contracting party as well as the author of the act. However, this solution had been misused, with bad faith contracting parties using it to attempt to evade their obligations.

In a dramatic reversal, the Court of Cassation has overturned this consistent case law. It now considers that an act concluded by partners in their capacity as representatives of the company, and not expressly in the name of this company in formation, cannot be annulled without investigating whether it results not only from the terms of the act but also from all the circumstances that, notwithstanding defective drafting, the common intention of the parties was that it be executed in the name or on behalf of the company in formation . Indeed, since the requirement that the act must, expressly and under penalty of nullity, mention that it is executed “in the name” or “on behalf” of the company in formation does not explicitly result from the texts governing the fate of acts executed during the formation period, the Court of Cassation now considers it possible and desirable to recognize the judge's power to sovereignly assess, through an examination of all circumstances, both intrinsic and extrinsic to the act, whether the common intention of the parties was not that the act be concluded in the name or on behalf of the company in formation and that this company could then, after acquiring legal personality, decide to take over the commitments made. This welcome paradigm shift should provide more legal certainty to companies.

Cass. com., 28 May 2025, LawLex202500004483JBJ: the validity of the act executed on behalf of a company in formation does not require that the company actually registered bears exactly the same corporate name as that mentioned in the disputed act, except in cases of deceit or fraud.

Cass. 3e civ., 5 November 2014, LawLex202200003697JBJ.

CA Dijon, 29 April 2021, LawLex202300009113JBJ, considering that the take-over by an SAS of the commitments made by its founder under an agreement does not benefit from the provisions of Articles L. 210-6 and R. 210-6 of the Commercial Code, since it was only undertaken by the latter in his personal name, and no mention appears in the document, signed by him, indicating that he acted on behalf of a company in formation, let alone for the SAS.

Cass. com., 19 January 2022, LawLex202200011462JBJ.

Cass. com., 2 February 2010, LawLex202200003635JBJ.

Cass. com., 15 May 2012, LawLex202200002604JBJ; 23 January 2007, LawLex202200003702JBJ.

Cass. com., 29 November 2023, LawLex202300014078JBJ, LawLex202300014079JBJ and LawLex202300014080JBJ. See also, Cass. com., 12 February 2025, LawLex202500000994JBJ, which holds that a memorandum of understanding signed prior to the registration of a company, under which one of the parties commits both on their own behalf and for any third party of their choice whom they reserve the right to substitute, clearly and unequivocally demonstrates the common intention of the parties not to conclude this act in the name or on behalf of the company in formation.

Acts concerned

The decree of 3 July 1978  provides for three methods of taking over commitments depending on when they were concluded. Under this text, the takeover can result from the annexing of the acts to the articles of association before their signing, the granting of a mandate, and finally a vote by the majority of the partners. In principle, no takeover, even implicit , is possible outside these methods  unless the parties to the contract have provided for a clause substituting the company for the founding partners  or have agreed, after registration, on a substitution of the contracting party . The takeover of commitments made in the name of a company in formation cannot result from the mere agreement of the parties, nor from their tacit intention of substitution, but must meet the specific legislative and regulatory conditions governing the obligations of companies in formation .

First, regarding acts performed before the signing of the articles of association, the decree   indicates that appending them to the articles at the time of their signing by the partners is sufficient to ensure their adoption upon the company's effective registration. Thus, a company in formation whose articles specify that its partners have entered into a commercial lease on its behalf and that their signature will result in the adoption of commitments upon its registration, must be considered as the lessee of the lease . Similarly, when the partners approve, in accordance with the articles, the acts performed on behalf of the company in formation, including a pledge whose statement is attached to the articles, it must be declared enforceable against creditors, even if it was registered under a different commercial register number than that of the company then in formation, without requiring new publicity . Conversely, a company cannot be bound by a contract concluded by one of its founders while it was in formation if no statement of acts performed on its behalf during this period has been appended to its articles . In other words, to ensure the adoption of commitments made during the company's formation, it is necessary, even in the presence of a statutory clause specifying that the signing of the articles will produce this effect, to prepare a statement of acts performed on behalf of the company, indicating for each the commitment resulting for the latter, and to append it to the articles . The interest in taking legal action is not contingent upon the prior demonstration of the merits of the request, so an action brought against its lessor by a company is admissible even if the act appended to its articles is not sufficiently precise regarding the identity of the lessor or the date of the lease's signing .

The take-over can also result from registration when the partners authorize one or more of them, or even a non-partner manager , to perform acts on behalf of the company between the signing of the articles of association and registration . The mandate can be included in the articles of association or be the subject of a separate document . The 1978 decree specifies that this method of take-over is only valid if the commitments in question are determined and their implementation process is detailed in the mandate . While case law was long strict on the form of the mandate, not hesitating to invalidate it in case of drafting errors , it is now more flexible and accepts that the majority partner-manager of an SCI in formation, specifically and expressly tasked, according to the articles of association, with acquiring a building, holds a mandate to make this commitment on behalf of the company, even if designated in the document as a manager and not as a partner . When the articles of association contain a mandate given by the partners to one of them to obtain loans, the commitments made by the latter are deemed taken over by the mere fact of the company's registration in the trade and companies register . Conversely, the registration of a company does not validly result in the take-over of a lease concluded in its name before this formality, in the absence of a document evidencing the mandate given by the partners, even if they have all expressly agreed to the commitment by ratifying it . However, case law considers that a mandate, which concerns commitments necessary for the activity of a company in formation and specifies that registration with the RCS entails their take-over, can be considered valid, even if it was given after the acts in question were performed .

The last method for the take-over of commitments provided by the decree occurs after registration. The partners may decide to take over commitments that were not automatically assumed at the time of registration because the conditions were not met . This decision is made unanimously by the partners, unless the articles of association provide otherwise.

Therefore, a company that is duly registered can only take over the commitments made by persons who acted on its behalf before its registration if a special resolution by the collective of partners has been adopted by a majority of them, and not by a simple collective decision of the latter   or an implicit ratification inferred from its monthly payments . However, the transfer of a business concern including a leasehold right, which occurred before the company's registration and was formally ratified by the general meeting of partners thereafter, is deemed to have been concluded by the company from the outset .

The courts are very attentive to attempts at fraudulent takeovers of actions, even if they may have determined that fraud was not characterized by the length of time between the loan subscription and the general meeting, as long as the company initially recorded the debt in its balance sheet and the vote could not be held on the originally scheduled date due to a delay in preparing the accounts .

Decree 78-704 of 3 July 1978 concerning the application of Law No 78-9 of 4 January 1978 amending Title IX of Book III of the Civil Code, OJ 7 July 1978.

Cass. com., 17 June 2008, LawLex202200003651JBJ, specifying that neither the receipt of a delivery of furniture and partial payment of the price, nor the withholding of the balance of the invoice due to the existence of defects by a company in the process of formation, explicitly constitutes a take-over of the commitment made before its registration; 24 January 2007, LawLex202200003826JBJ.

Cass. com., 13 March 2001, LawLex202200003794JBJ.

Cass. 3e civ., 19 October 2022, LawLex202300004359JBJ.

Cass. com., 9 October 2001, LawLex202200003613JBJ, considering that the mandate to make commitments on behalf of a company can be given to one of the partners who has been appointed as manager.

Cass. com., 18 May 2005, LawLex202200006549JBJ, holding that the express and precise authorization of the two partners for the subscription of a loan contracted in the name of a company in formation is sufficient to entail the take-over of the loan as provided by Article 1843 of the Civil Code.

Cass. com., 21 July 1987, LawLex202200003614JBJ.

Cass. com., 9 October 2001, LawLex202200003613JBJ; 24 March 1998, LawLex202200003803JBJ, emphasizing that acts performed on behalf of a company being formed under a mandate are not automatically taken over by mere registration unless the commitments in question are sufficiently determined and their terms of application specified by the mandate.

Cass. 3e civ., 13 March 1996, LawLex202200003795JBJ, considering that the non-member manager who signs a sales agreement on behalf of a company in formation remains personally bound by the agreement entered into when the mandate contained in the articles of association designates him only in his capacity as manager.

Cass. 3e civ., 4 July 2001, LawLex202200003776JBJ.

Cass. 3e civ., 12 November 2015, LawLex202200003804JBJ.

Cass. com., 6 December 2005, LawLex202200006423JBJ.

Cass. com., 20 February 2019, LawLex202100003190JBJ, considering that the absence of an annex to the articles of association listing all commitments made on behalf of a company in formation, a mandate contained in a separate document, or a general meeting convened after the company's registration to take over acts performed during the formation period prevents the regular takeover of a lease contract, even if the company has ratified it, consistently and unequivocally acted as the lessee, and participated in the transaction with the lessor; 13 December 2011, LawLex202200003652JBJ; 9 October 2007, LawLex202200003653JBJ; 14 November 2006, LawLex202200003615JBJ; 20 January 1987, LawLex202200003825JBJ; Cass. 3e civ., 23 May 2019, LawLex202200003779JBJ, holding that the takeover by a company in formation of a sales act cannot validly result from a clause stating that registration within three months of its signing will automatically result in the takeover of this commitment, as it is not one of the three methods provided by the decree; 15 October 2015, LawLex202100003189JBJ; Cass. 1re civ., 26 April 2000, LawLex202200003628JBJ.

Cass. com., 14 January 2003, LawLex202200003708JBJ.

Cass. 3e civ., 30 March 2023, LawLex202300009715JBJ.

Cass. com., 12 July 2004, LawLex202100003182JBJ.

Cass. com., 1 April 2003, LawLex202200003827JBJ; 24 March 1998, LawLex202200003803JBJ, considering that acts performed on behalf of a company in formation under a mandate are not automatically taken over by mere registration unless the commitments in question are sufficiently determined and their terms of application specified by the mandate.

Cass. 3e civ., 2 February 2005, LawLex202100003183JBJ.

Cass. com., 2 July 1996, LawLex202200003828JBJ.

Cass. com., 15 January 2020, LawLex202200000401JBJ.

Cass. com., 21 March 2018, LawLex202200003618JBJ; 24 June 2014, LawLex202200003754JBJ; Cass. 2e civ., 14 December 2006, LawLex202200003621JBJ, specifying that the contract concluded by the director of a company in formation is enforceable against the company due to its substitution for the director in the execution of the contract, provided that the director did not commit in the name of the company and that the company implemented the contract, without the need for formalities related to the take-over of commitments to be completed.

Cass. com., 18 June 2025, LawLex202500006524JBJ.

Cass. 3e civ., 13 July 2011, LawLex202200003612JBJ.

Cass. com., 29 May 1980, LawLex202200003831JBJ.

Cass. com., 26 June 2012, LawLex202200003704JBJ; 13 July 2010, LawLex202200003611JBJ; 14 November 2006, LawLex202200003615JBJ; Cass. soc., 18 December 1979, LawLex202200003720JBJ specifying that the proof of the take-over by the company, after its registration, of commitments previously undertaken in its name by the associates, which is incumbent upon the latter, cannot result from the signing of articles of association to which the list of acts performed on behalf of the company is not annexed.

Conditions governing adoption of pre-incorporation acts

Article L. 210-6 of the Commercial Code provides that when the company takes over commitments made during its formation period, these are deemed to have been fulfilled by it from the outset. This is the first consequence of the takeover of acts. In fact, commitments made in the name of a company in formation are taken over with retroactive effect from the date of its registration, which grants it legal personality . The date of the associates' resolution for the takeover of the commitment resulting from a sale of condominium lots is therefore irrelevant since, by the retroactive effect of the takeover, the company is deemed to be the owner of the property from the outset of the sale . However, the retroactive effect attached to the takeover of commitments made in the name of a company in formation implies that they were contracted before its registration .

The second effect of the take-over of commitments by the company is that the associate originally responsible for the commitment is personally released from their obligation. Thus, the registration of a company entails the take-over of commitments made between the signing of the articles of association and this registration, and retroactively discharges the two signing associates, even if the special mandate conferred by the articles of association only concerns one of them . Similarly, the take-over by the company, after its formation and registration, of commitments made in its name before acquiring its legal personality, releases the founders from any obligation even if the state of these commitments was not annexed to the articles of association before their signing .

Finally, the take-over of commitments has a declarative nature that exempts the company from having to publish it to make it enforceable against third parties .

Cass. 3e civ., 7 December 2011, LawLex202100003185JBJ.

Cass. 3e civ., 7 April 2016, LawLex202200003623JBJ; 2 February 2005, LawLex202100003183JBJ, holding that the transfer of a business concern including a leasehold right, occurring before the company's registration and formally ratified by the general meeting of shareholders thereafter, is deemed concluded from the outset by the company; Cass. 2e civ., 10 September 2009, LawLex202200003616JBJ, considering that a bid made in the name and on behalf of a company in the process of formation is not subject to invalidity in the event of the take-over of commitments because it is deemed to have been concluded from the outset by the company subsequently registered; 19 December 2002, LawLex202200003768JBJ; Cass., 1re civ., 3 December 1980, LawLex202200003830JBJ; Cass. com., 10 October 1984, LawLex202200003194JBJ emphasizing that a contract entered into by a shareholder of a joint stock company in formation, recorded in the company's accounts and taken over by it after registration, is deemed concluded by the latter from the outset, even if it is not listed in the annex of the articles of association.

Cass. com., 21 September 2004, LawLex202200003715JBJ.

Cass. com., 13 December 2005, LawLex202200003624JBJ; 15 June 1993, LawLex202200004007JBJ indicating that when a bank cannot ignore that the founder of a company has signed an acceptance clause of a bill of exchange as an agent and that the company has taken over the commitments made by the latter before acquiring legal personality, the founder is not personally bound by the instrument.

Cass. com., 12 February 1974, LawLex202200003824JBJ.

Cass. 3e civ., 9 July 2003, LawLex202200003829JBJ.

Company Law (en cours)

37. Effects

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

Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

37. Effects

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