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

Company Law (en cours)

The partners of an SAS can decide to transform it into a company of another form, although the reverse scenario is far more common, given the attractive regime of this company. In accordance with Article L. 225-244 of the Commercial Code, as referred by Article L. 227-1, the decision to transform must be made based on the report of the company's statutory auditors, if any, who must certify that the shareholders' equity is at least equal to the share capital. However, the rule set by Article L. 225-243, which states that any public limited company can transform into a company of another form if, at the time of transformation, it has existed for at least two years and has prepared and had approved by the shareholders the balance sheet of its first two financial years, does not apply to simplified joint-stock companies .

The transformation of the SAS has certain particularities that should be highlighted. It is subject, like any amendment to the statutes, to the completion of publicity measures .

The transformation of an SAS into a general partnership requires the unanimous agreement of all partners . In this case, the conditions provided for in Articles L. 225-243 and the first paragraph of Article L. 225-244 of the Commercial Code are not required . The necessity of unanimity among the partners is imperative since, following the transformation of the SAS into an SNC, in addition to the obligation to cover losses up to their contribution , they will have to answer indefinitely and jointly for the company's debts .

Furthermore, since all general partners must have the status of merchant , the partners of the SAS transformed into an SNC must 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.

Finally, if the transformation of an SAS into an SNC only takes effect with respect to third parties upon the completion of publicity formalities, it is enforceable, from the date of the decision, against the company and its corporate officers, whose functions cease as of right .

The transformation of an SAS into a limited partnership or a partnership limited by shares must be decided under the conditions provided for the amendment of the articles of association and with the agreement of all partners who agree to become general partners . When transformed into a limited partnership, the company must consist of general partners, who have the status of partners in a general partnership, meaning they must all have the status of merchants and are jointly and severally liable for the company's debts, and limited partners, who are liable for the company's debts only up to the amount of their contribution, which cannot be made in the form of services . When transformed into a partnership limited by shares, the company must consist of general partners, who, like those in an SCS, have the status of merchants and are jointly and severally liable for the company's debts, and limited partners, who have the status of shareholders and bear losses only up to their contributions. The number of limited partners cannot be less than three .

The decision to transform a SAS into a limited liability company must be made under the conditions provided for the amendment of the articles of association of companies of this form . The number of partners in the limited liability company cannot exceed one hundred . Insurance, capitalization, and savings companies cannot adopt the form of an SARL .

When an SAS is transformed into a public limited company, the share capital must be at least 37,000 euro . The transformation of an acquiring company, initially constituted as an SAS, into an SA, is enforceable against the shareholder of the acquired company, even if the minutes of the general meeting of the acquiring company were filed after the one-month period prescribed by Article R. 123-105 of the Commercial Code, as long as the shareholder could not have been unaware of the new corporate form indicated in the merger agreement and in the notice of the merger project published, as well as in the first resolution submitted to the shareholders of the acquired company during an extraordinary general meeting, and in various documents sent to them by registered mail . In the event of the appointment of an ad hoc representative for the purpose of convening the shareholders' meeting to decide on the transformation of the simplified joint-stock company into a public limited company, this does not constitute a mere provisional measure, nor a protective measure, and even less an investigative measure .

Finally, regardless of the corporate form into which the SAS will be transformed, when there are inalienability clauses and change of control clauses for a corporate entity partner, these can only be modified unanimously by the partners , with a view to the transformation of the company. The clauses requiring prior approval for any transfer and forced transfer of shares can only be modified by a decision collectively made by the partners under the conditions and forms provided for in the statutes .

Commercial Code, Art. L. 225-245, para. 3, by reference to Art. L. 227-1, para. 3.

Cass. com., 2 December 2020, LawLex202200009499JBJ.

Saint-Denis de la Réunion, 24 June 2013, LawLex202300011405JBJ.

Commercial Code, Art. L. 227-19, para. 1.

Commercial Code, Art. L. 227-19, para. 2.

Commercial Code, Art. L. 225-245, para. 1, by reference to Art. L. 227-1, para. 3.

Paris, 22 September 2015, LawLex202200008348JBJ.

Commercial Code, Art. L. 225-245, para. 2, by reference to Art. L. 227-1, para. 3.

612. Specificities