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

Company Law (en cours)

Pursuant to Article 1871, para. 2, of the Civil Code, the partners freely agree on the corporate purpose, operation, and conditions of the joint venture, provided they do not derogate from certain mandatory provisions common to all companies .
First, Article 1833, to which Article 1871 refers, stipulates that the partnership must have a lawful purpose and be established in the common interest of t …

Formation procedures

PELTIER, REGNAULT, COURET, The contribution of shares to a joint venture, Act. prat. 1994/18.

Pursuant to Article 1871, para. 2, of the Civil Code, the partners freely agree on the corporate purpose, operation, and conditions of the joint venture, provided they do not derogate from certain mandatory provisions common to all companies .

First, Article 1833, to which Article 1871 refers, stipulates that the partnership must have a lawful purpose and be established in the common interest of the partners. According to Article 1871-1, the chosen purpose determines the civil or commercial nature of the partnership, which generally results in the application of the regime of civil companies or general partnerships, as the case may be, in relations between partners. However, the text allows the parties the freedom to provide for a different organization. Furthermore, the exercise of certain activities is expressly prohibited: Article 1871 indeed refers to the provisions of Article L. 411-1 of the Monetary and Financial Code, which prohibit the public offering of financial securities or shares, as well as the issuance of negotiable securities.

Then, pursuant to Article 1832, a joint venture company is composed of at least two partners, natural or legal persons, who agree by contract to allocate to a common undertaking assets or their industry with a view to sharing the profit or benefiting from the savings that may result, and who commit to contributing to the losses. In the absence of affectio societatis, which requires a personal investment by the partner distinct from a mere "interest" in the management of the business , the existence of a joint venture company is formally excluded . The same applies when the parties do not collaborate on an equal footing but under a relationship of subordination, and the formation of the company is only intended to circumvent the application of labor law .

The traditional rules relating to contributions must be adapted to the absence of legal personality of the company, which is the consequence, under para. 1 of the text, of the lack of registration. Indeed, it follows from this status that the contributions of the partners do not contribute, with respect to third parties, to the formation of share capital, but remain their property and are only made available to the company , unless they decide to place them in joint ownership . Any sum allocated to the realization of the corporate purpose is considered a contribution in cash , which is distinct from a loan , and may be subject to registration duties under Article 809, I, 1° of the General Tax Code . Contributions in kind may result from the provision of a business asset  or parking spaces . However, the provision of a tractor and a semi-trailer does not constitute a contribution made to the company, as the parties have agreed on a fixed monthly rent in return . Similarly, a legal action cannot be the subject of a contribution in enjoyment remunerated by the allocation of shares in a joint venture . According to the Court of Cassation, a joint venture must be considered as having no existence when one of the partners has never made the promised contributions in kind . This sanction does not apply, according to the Paris Court of Appeal, when the non-compliance with the commitment is only partial . Furthermore, nothing prevents the realization of contributions in the form of services in joint ventures.

Finally, the partnership company is only lawful insofar as a partner's commitments cannot be increased without their consent  and they can participate in collective agreements . Under penalty of being deemed unwritten, the provisions of the articles of association or the parties' agreement cannot allocate all the profit generated by the company to one of them or exempt them from all losses, nor can they completely exclude a partner from profit or assign them all the losses .

Civil Code, Art. 1832, 1832-1, 1833, 1836, para. 2, 1844, para. 1 and 1844-1, para. 2 and Monetary and Financial Code, Art. L. 411-1.

Cass. com., 3 June 1986, LawLex202200003081JBJ; 24 May 2017, LawLex202300008415JBJ.

Cass. com., 3 June 2014, LawLex202300010009JBJ, emphasizing that these contributions only concern the enjoyment of the assets, in the absence of the company's own assets.

Cass. soc., 17 April 1991, LawLex202400000011JBJ.

Cass. com., 31 May 2005, LawLex202200003098JBJ.

Cass. com., 11 October 1988, LawLex202400000014JBJ.

CA Paris, 11 February 2000, LawLex202300014922JBJ.

Cass. 3e civ., 27 June 2019, LawLex202300010006JBJ. - Also see Cass. com., 9 April 1996, LawLex202200004048JBJ, emphasizing that the refusal to sign four successive drafts of joint venture articles of association indicates the absence of an unequivocal intention by all partners to collaborate together and on an equal footing in pursuing the common endeavor.

See, in the relationships between truck drivers and transport companies, Cass. soc., 25 October 2005, LawLex202300014921JBJ; 14 May 1992, LawLex202300014920JBJ; 13 June 1991, LawLex202400000012JBJ; 17 April 1991, LawLex202400000011JBJ. - However, see, recognizing the existence of a true joint venture between the driver and the transport company, Cass. soc., 13 January 1994, No LawLex202400000013JBJ. - Cf., in the relationships between an artist and a show organizer, Cass. soc., 31 October 1991, LawLex202400000010JBJ.

See in particular, Cass. 1re civ., 14 January 2003, LawLex202300009875JBJ, holding that the joint purchase by two people of a lottery ticket constitutes a contribution characteristic of the intention to associate for sharing the cost and potential gains and establishes the existence of a joint venture.

Cass. com., 15 December 1998, LawLex202200002970JBJ.

Cass. com., 11 February 1986, LawLex202300014734JBJ.

Cass. com., 15 May 1973, LawLex202200003182JBJ.

Company Law (en cours)

626. Formation procedures(1)

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

626. Formation procedures(1)

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