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

Company Law (en cours)

Known since the 17th century, joint stock companies, or more precisely their ancestors, were banned during the Revolution due to their speculative nature. Quickly reinstated, they were subjected to prior governmental authorization by the Napoleonic Code. The liberalization of the joint stock company dates from the law of 24 July 1867. Their exponential development since then has necessitated numerous reforms, including the one conducted by the law of 24 July 1966  which established a form of administration for joint stock companies inspired by German law, offering a choice between a classic board of directors structure or a dual structure with an executive board and a supervisory board, and the one resulting from the law on new economic regulations (NRE) of 15 May 2001, which redefined the powers of the board of directors by allowing the separation of the roles of chairman of the board and chief executive officer and limiting the accumulation of mandates. It also strengthened control over regulated agreements and added provisions aimed at giving employees a more active role in corporate life. The Financial Security Act of 1 August 2003 strengthened the protection of shareholders and investors in response to abuses related to executive compensation under the influence of foreign standards from across the Channel and the Atlantic, which introduced the concept of corporate governance in France. More recently, laws enacted in 2011, 2013, and 2019 have allowed routine agreements to escape any control, increased the representation of women on boards of directors and supervisory boards, and expanded employee representation within the boards of directors and supervisory boards of large companies.

The joint stock company is a company limited by shares, just like the partnership limited by shares or the simplified joint-stock company. The securities it issues may be listed on financial markets or offered to the public. Like any capital company, the SA has a low intuitus personae, unlike partnerships. The shareholder's liability is limited to the amount of their contribution. The joint stock company is highly regulated: it is subject to ordinary company law, special rules relating to companies limited by shares,  as well as rules specific to companies limited by shares . This restrictive legislative framework has led many companies to opt for more flexible forms such as the SAS or the SASU, although the largest structures continue to adopt this corporate form. In 2022, simplified joint-stock companies accounted for 65% of company formations, limited liability companies 28%, with the remaining 7% comprising all other corporate forms, including the joint stock company . Furthermore, data from 1 January 2013 to 1 January 2023 indicates that out of 3,918,265 companies created, 1,135,104 are simplified joint-stock companies, 713,572 are limited liability companies, and only 1,139 are joint stock companies .

L. 66-537 of 24 July 1966 on commercial companies.

L. 2003-706 of 1 August 2003 on financial security.

CAUSSAIN, Corporate governance, power returned to shareholders, Creda-Litec, 2005; BISSARA, Law and practice of governance of listed companies, Joly and Ansa, 2007; MATTOUT, Governance of the listed joint stock company: comparison with the governance of a State, Mélanges Didier, Economica, 2008, 315; DURAND-BARTHEZ, The guide to corporate governance, Dalloz, 4th ed., 2023.

Insee references, Companies in France, ed. 2022.

Source: Statistical Observatory of the National Council of Commercial Court Registrars, https://statistiques.cngtc.fr.

461. History