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

Company Law (en cours)

Any individual or legal entity  can become a partner in a general partnership. Thus, two spouses either alone or with other persons can hold this status . However, anyone planning to use jointly owned property to make a contribution to the company or acquire shares must inform their spouse and provide justification in the deed . Legal entities are subject to the rules applicable to each of them .

Since the SNC constitutes a commercial company by its form alone , the partners, whether natural or legal persons, are all deemed to be merchants , even if they do not engage in commercial activity. As a result, while merchants are generally required to register with the trade and companies register , there is no need for separate registration from that of the company for general partners who are natural persons, when they do not engage in commercial activity personally . Consequently, the SNC must declare, at the time of its registration, the names, customary names, pseudonyms, first names, and personal addresses of the partners who are indefinitely and jointly liable for the company's debts, their dates and places of birth, and their nationality .

The status of merchant for general partners entails other consequences. Firstly, it exempts the bank from verifying the solvency of its clients at the time of granting a loan since they are indefinitely liable for the company's debts . Secondly, the status of merchant for general partners makes them subject to the regime of insolvency proceedings , rather than that of personal over-indebtedness . However, the partner of an SNC who is subject to judicial liquidation loses the status of merchant, a fundamental condition of their membership in this company .

The potential absence of commercial activity by the general partner does not exclude the classification of a professional activity, with the resulting consequences. Indeed, the Court of Cassation has considered that the operation of a general partnership necessarily involves a professional activity by its partners, consisting of the control and supervision of the company, which obliges them to be subject to the health and maternity insurance scheme for self-employed non-agricultural workers . A partner in a general partnership cannot therefore invoke their lack of registration in the commercial register to avoid registration with a social insurance fund and the payment of contributions they owe personally . The co-director partner of a general partnership, who cannot be an employee of the latter, cannot claim an old-age pension from the general social security scheme  and must be affiliated with the independent old-age pension scheme for the self-employed . Finally, the status of merchant of a general partner is not sufficient, in itself, to deduce that the latter exercises their main professional activity within the company .

See for an application, CA Douai, 26 October 2017, LawLex202100005820JBJ.

Cass. com., 5 December 2013, LawLex202100005685JBJ, CA Nancy, 24 January 2022, LawLex202200008898JBJ.

CA Amiens, 22 July 2021, LawLex202200008559JBJ.

Cass. 2e civ., 11 October 2005, LawLex202200006943JBJ; 16 December 2010, LawLex202200006943JBJ.

Paris, 11 January 1990, LawLex202200007494JBJ.

Cass. soc., 5 April 1974, LawLex200200006088JBJ.

Cass. soc., 24 November 1971, LawLex202200008989JBJ.

Cass. com., 6 April 1999, LawLex202200008554JBJ.

CA Toulouse, 18 May 2010, LawLex202200008535JBJ.

Commercial nature of the company

Although they are merchants by virtue of the company's form, the general partners must also possess commercial capacity, meaning they must not be subject to restrictions on engaging in commerce aimed at protecting those lacking capacity and avoiding conflicts of interest in certain professions.

In fact, only an emancipated minor can be a merchant with the authorization of the guardianship judge at the time of the emancipation decision, and the president of the Judicial Court, if they make this request after being emancipated . In the event of the continuation of the company despite the death of a partner, if one or more of the partner's heirs are unemancipated minors, they are liable for the company's debts only up to the extent of the estate of their predecessor . Furthermore, in this scenario, the company must be transformed within one year from the date of death into a limited partnership in which the minor becomes a limited partner. Failing this, it is dissolved . However, the minority of one of the partners in an SNC cannot be used against the tax administration to avoid paying taxes .

An adult under guardianship cannot engage in commerce or, in fact, become a partner in an SNC . However, although placing an adult partner under guardianship legally deprives them of the status of a merchant, continuing their commercial activity makes them subject to reorganization proceedings . An adult under curatorship also cannot become a partner in an SNC, as they cannot be assisted daily . However, an adult placed under judicial protection retains the exercise of their rights as long as they do not perform an act for which a special representative has been appointed pursuant to Article 437 of the Civil Code . Their acts may be rescinded for simple lesion or reduced in case of excess, even though they could be annulled under Article 414-1 of the Civil Code , which states that to perform a valid act, one must be of sound mind. It is up to those seeking annulment on this basis to prove the existence of a mental disorder at the time of the act .

Certain professions cannot be exercised simultaneously with a commercial activity due to their incompatibility with the status of a merchant. This is the case for civil servants , or members of liberal professions such as lawyers . Similarly, a limited liability professional partnership, civil by its purpose but commercial by form, cannot be associated with an SNC . However, doctors who decide to transform their SA into an SNC acquire the status of merchants and cannot invoke their own ethical fault to request the annulment of the operation and escape their commitments .

Finally, other persons cannot become general partners or maintain this status, if applicable, due to prohibitions imposed on them. This may involve a prohibition resulting from an additional penalty for certain offenses . Indeed, persons prohibited from engaging in a commercial or industrial profession, from directing, administering, managing, or controlling in any capacity, directly or indirectly, for their own account or on behalf of others, a commercial or industrial undertaking or a commercial company cannot become partners in an SNC . Any violation of this prohibition is punishable by two years of imprisonment and a fine of 375,000 euros . Personal bankruptcy also entails a prohibition from directing, managing, administering, or controlling, directly or indirectly, any commercial or artisanal undertaking, any agricultural operation, or any undertaking with an independent activity and any legal entity . Other prohibitions may be related to a tax conviction . Consequently, an SNC partner subject to a management prohibition loses their status as a merchant and can no longer request to be subject to judicial liquidation proceedings .

Commercial Code, Art. L. 121-2 and Civil Code, Art. 413-8.

Commercial Code, Art. L. 221-15, para. 7.

General Code of Public Property, Art. L. 123-1, 1°.  See, by analogy, Cass. 3e civ., 16 February 2011, LawLex202100003167JBJ, relating to an SARL.

Decree No 91-1197 of 27 November 1991 organizing the legal profession, Art. 111, OJ of 28 November 1991.

CA Versailles, 28 October 2004, LawLex202200007335JBJ.

Paris, 21 March 2000, LawLex202200008942JBJ.

Law No 2008-776 of 4 August 2008 on the modernization of the economy (known as LME), Art. 70, OJ of 5 August 2008.

CA Lyon, 10 April 2008, LawLex202200009158JBJ.

CAA Marseille, 4 October 2016, LawLex202200008583JBJ.

Cass. com., 28 November 2000, LawLex202200008902JBJ.

Company Law (en cours)

331. Commercial nature of the company

332. Commercial capacity of partners