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

Company Law (en cours)

Among the various causes of dissolution contemplated by Article 1844-7 of the Civil Code, some are inherent to the company itself.
1) Expiry of the term
Article 1844-7, 1° of the Civil Code provides for the automatic dissolution of the company upon the expiration of its term. It indeed states that the company ends upon the expiration of the time for which it was established, which is, at most, nin …

End of the company contract.

Among the various causes of dissolution contemplated by Article 1844-7 of the Civil Code, some are inherent to the company itself.

Article 1844-7, 1° of the Civil Code provides for the automatic dissolution of the company upon the expiration of its term. It indeed states that the company ends upon the expiration of the time for which it was established, which is, at most, ninety-nine years, in accordance with Articles L. 210-2 and R.210-2 of the Commercial Code and 1833 of the Civil Code. Thus, a company automatically dissolved upon the expiration of its term becomes, in fact, if, after this deadline, the activity has continued and the affectio societatis has persisted .

To avoid this issue, the legislator provides that the company may be extended, without such extension exceeding ninety-nine years. In the absence of express or tacit extension of its duration, a partnership is dissolved upon reaching its term . Furthermore, the statutory clause that organizes the modalities of the company's extension cannot be invoked by third parties, so that the extension decided before the company's term is valid with respect to them, even if the two-year period before the expiration, provided by the statutes, has not been respected by the partners . The reduction of a company's duration from 99 to 19 years, which does not result in its early dissolution, is not subject to the unanimity rule provided by the statutes for decisions of extension and early dissolution . However, the granting of a long-term lease that exceeds by more than twenty years the duration of an agricultural land group indirectly requires an amendment to the partnership agreement and, consequently, a decision by an extraordinary general meeting .

2) Fulfillment or extinction of the purpose

A company is formed with the aim of achieving an objective that constitutes its corporate purpose. According to Article 1844-7, 2° of the Civil Code, the disappearance or extinction of this purpose leads to the dissolution of the company.

The dissolution of a company cannot, however, be pronounced without the judge establishing with sufficient certainty that it has fulfilled its corporate purpose. In fact, the dissolution of a company for the fulfillment of its corporate purpose cannot be pronounced solely because, since the transfer of its business assets, it no longer engages in any commercial activity without having been put into dormancy, and its continuation, which generates losses, is artificial .

The extinction of the corporate purpose involves the occurrence of a particular event making the continuation of the undertaking's activity impossible . Most companies draft a sufficiently broad corporate purpose to avoid this type of situation. However, it does occur, notably when the partners of a joint venture company unanimously decide to sell all the plots that have been contributed to it in enjoyment, without any commitment from anyone to make new contributions, while it pursues no other purpose than the exploitation of these lands . Similarly, the definitive cessation of the operation of a food business, which constitutes the exclusive corporate purpose of a company, leads to the extinction of this purpose and the automatic dissolution of the company, even if the exercise of an ancillary service station activity remains possible . An SARL whose statutory corporate purpose is the performance of all work related to the profession of chartered accountant must be dissolved due to the extinction of its purpose, as it no longer includes the minimum number of required professionals and has been deregistered from the Order of Chartered Accountants, so that it can no longer, even if it still engages in advisory activities, perform the work related to the corporate purpose set by its statutes . Conversely, the automatic dissolution of a company due to the extinction of its corporate purpose cannot result from either the sale of a business or the cessation of its operation , as long as its corporate purpose is not limited to its operation . Similarly, the cessation of activity of one of the two members of a non-trading private company does not result in the extinction of its purpose or its dissolution, when its statutory purpose is to facilitate the practice of its members' profession by pooling all necessary material means . Finally, the sale by a holding company, whose statutory purpose is the acquisition, management, and administration of company shares, of the shares it holds in the capital of its subsidiary does not result in the extinction of its purpose or its dissolution .

Pursuant to Article 1844-7, 3°, the annulment of the company contract, even if rare, may lead to the dissolution of the company. It is then necessary to refer to the classic causes of invalidity provided by the legislator in Articles L. 235-1 et seq. of the Commercial Code.

Cass. 3e civ., 23 October 2013, LawLex202300002058JBJ; Cass. 1re civ., 23 October 2007, LawLex202300002053JBJ.

Cass. com., 13 September 2017, LawLex202300002055JBJ; 31 January 2012, LawLex202200008356JBJ, considering that in the absence of any express or tacit extension of its duration, an SNC, dissolved upon the expiration of its term, must be represented in court by a liquidator.

Cass. 2e civ., 27 June 2019, LawLex202300002062JBJ.

CA Aix-en-Provence, 12 January 2006, LawLex202200008446JBJ; Cass. com., 23 March 2010, LawLex202300002064JBJ, considering that the abandonment of a company's activity, as well as the judicial liquidation of its main shareholder, do not constitute just grounds for dissolution within the meaning of Article 1844-7, 5° of the Civil Code, as long as they do not establish the impossibility for the company to function normally.

Cass. com., 15 September 2009, LawLex202200002986JBJ.

Cass. com., 20 November 2012, LawLex202300002190JBJ, holding that when a GAEC has as its purpose the exploitation of agricultural assets contributed or made available to it by the partners, purchased or leased by it, and generally all activities related to this purpose, the loss of partner status by one of its members does not result in the extinction of this purpose and therefore does not imply its dissolution, as long as it does not in itself prevent the activity from being carried out by the joint work of several partners; 7 October 2008, LawLex202200002949JBJ. - Also see Cass. com., 3 May 1995, LawLex202300002416JBJ, considering that an SARL whose statutory purpose is the performance of all tasks related to the profession of chartered accountant must be dissolved, as it no longer includes the minimum number of required professionals and has been deregistered from the order of chartered accountants.

Cass. com., 30 June 2015, LawLex202100003701JBJ.

Cass. com., 28 November 2018, LawLex202300002054JBJ.

Cass. 3e civ., 4 February 2009, LawLex202300002056JBJ.

Cass. com., 20 November 2012, LawLex202300002065JBJ.

Cass. 1re civ., 27 April 1964, LawLex202300002852JBJ, considering that the inaction of the manager of a real estate civil company (SCI) in favor of achieving the corporate purpose, since he acquired land without proceeding with building constructions, constitutes just grounds for dissolution.

Cass. com., 8 November 2016, LawLex202200002951JBJ.

Cass. com., 30 March 2016, LawLex202200003045JBJ.

Cass. com., 3 May 1995, LawLex202300002416JBJ.

Company Law (en cours)

314. End of the company contract.

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314. End of the company contract.

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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