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

Company Law (en cours)

Composed of the sum of all contributions made by the partners, excluding those in the form of services, the share capital (capital social) constitutes the primary source of financing for companies. One of the essential duties of a partner is to release the share capital, even though, in practice, this release may occur at a relatively late stage in the company's life . Case law specifies that the share capital not released by one of the partners of an SARL is considered a claim of the company against the latter, and not an available asset or a credit reserve , which may be subject to a garnishment order by a creditor of this company .

The release of capital is not sufficient to exhaust the duties of the associate: the contribution made must also be adequate. Indeed, the funds contributed must enable the company to meet certain unavoidable expenses such as rent and salaries . If the associates can be held liable for not sufficiently endowing the company at its formation , the fact that a manager did not attempt to obtain a capital increase to address the company's difficulties can also constitute a management fault . Indeed, it may be preferable, when the company is experiencing difficulties, to mobilize its own resources rather than resort to external financing. Case law has emphasized the particular importance of this mode of financing by ruling that a decision to exclude shareholders who refused to subscribe to a capital increase when the company was facing significant difficulties was in accordance with the law .

Cass. com., 26 May 1999, LawLex202200008804JBJ, holding that the liquidator of a company is admissible to take action against former associates for payment of the unpaid amount of the shares they transferred.

Cass. com., 23 April 2013, LawLex202100004208JBJ.

Cass. 2e civ., 12 May 2016, LawLex202100003673JBJ.

Cass. com., 17 June 2020, LawLex202200001598JBJ.

Cass. com., 10 March 2015, LawLex202100001752JBJ, attributing to the partners and not to the directors, the inadequacy of contributions made to a company to ensure its operation under normal conditions at the time of its formation; 17 June 2020, LawLex202200001598JBJ.

Cass. com., 12 July 2016, LawLex202100001747JBJ; 23 November 1999, LawLex202200008975JBJ, indicating that the creation of a company without sufficient equity to ensure its operation under normal conditions and the continuation of the activity in the absence of measures taken to remedy it, constitute a fault of the manager likely to lead to their condemnation to make up the shortfall in assets.

Cass. com., 17 May 1994, LawLex202200008805JBJ.

53. Concept and function