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

Company Law (en cours)

The partners may make contributions in cash, in kind—movable property, immovable property , or even intangible, such as clientele —or in the form of services, by providing the company with technical knowledge, work , or services , unless the consideration of such contributions is expressly excluded by the articles of association . In return for these contributions, the partners receive ownership i …

Lack of formality

The partners may make contributions in cash, in kind—movable property, immovable property , or even intangible, such as clientele —or in the form of services, by providing the company with technical knowledge, work , or services , unless the consideration of such contributions is expressly excluded by the articles of association . In return for these contributions, the partners receive ownership interests .

Contributions in kind do not require any particular verification procedure in civil companies, unlike the regime imposed in SARLs by Article L. 223-9 of the Commercial Code, and in joint stock companies by Article L. 225-8 of the same code. Indeed, the valuation of contributions in kind is freely carried out by the partners. Similarly, the partners freely determine in the statutes the terms for the release of contributions in cash, except for the SCP, in accordance with the legal and regulatory provisions specifically applicable to each of the regulated liberal professions practiced jointly, and for the SCPI, in accordance with Article L. 214-96 of the Monetary and Financial Code. Contributions in the form of services are most commonly found in liberal professions and non-trading private companies .

The contribution of an asset can be made in full ownership, in enjoyment, in usufruct, or in bare ownership. In the case of joint ownership, in accordance with Article 815-3 of the Civil Code, the contribution of the jointly owned asset requires the consent of all co-owners; otherwise, it is unenforceable against them to the extent of the share of rights they hold in the joint ownership . In the event of the dismemberment of ownership rights, the contribution of a dismembered asset to a family SCI can serve as a vehicle for wealth transfer, while allowing the initial owner, often the manager, to retain management of the asset or a right to the income produced by the company. Dismemberment also promotes the retention of the asset within the family, as once decided, the partners can no longer freely transfer full ownership of the dismembered shares, but only transfer or donate their own right, that is, the usufruct or bare ownership of the shares. Conversely, the creation of an SCI by contributing the bare ownership of a building, without any financial means to manage its assets, followed shortly thereafter by the donation of the majority of the corresponding shares, presents a risk of reclassification as an indirect donation to evade tax, and a finding of the fictitious nature of the company . Similarly, the bank's Paulian action against the contribution of a building to a real estate civil company by the manager of an EURL, jointly liable for a loan granted to the latter, appears well-founded, even if the building has been replaced by social rights of equivalent value, as the difficulty of negotiating the shares and the risk of mortgages being registered against the SCI constitute factors that diminish the value of the creditor's security and impoverish the debtor .

Agen, 20 February 2008, LawLex202300009699JBJ; Cass. 3e civ., 15 January 2014, LawLex202200001460JBJ, emphasizing that the contribution of a building to a company is not equivalent to a sale.

Cass. 1re civ., 7 November 2000, LawLex202200000044JBJ, nevertheless requiring that the transfer of medical clientele preserves the patient's freedom of choice.

Cass. 3e civ., 16 February 2022, LawLex202200011461JBJ, holding that contributions in the form of services by two partners of a real estate civil company (SCI) cannot receive the same valuation when only one of them participated in the construction work and financed it; 28 November 2001, LawLex202200004114JBJ, denying a partner of an SCI who has fully paid their cash contribution the ability to compel the other partners to do the same, as the parties had agreed that those who carried out work on behalf of the company could allocate the cost to their current account, which could be offset against the amount of contributions due.

Cass. 1re civ., 30 March 2004, LawLex202200003579JBJ, considering that the presence of a partner holding contributions in the form of services prevents the dissolution of a professional civil society, even if the corporate capital is held by only one partner.

See, for an illustration, Cass. com., 14 December 2004, LawLex202200003578JBJ, considering that the partners of an SCEA, whose statutes exclusively provide for contributions in cash and not contributions in the form of services, cannot rely on such contributions to claim additional profits.

Cass. 1re civ., 29 November 1994, LawLex202300009649JBJ, holding that contributions in the form of services held in a professional civil society (SCP) must be taken into account to calculate the associates' contribution to losses, as long as they intended to distribute them in proportion to their rights to profits.

Cass. 1re civ., 29 November 1994, LawLex202300009649JBJ.

Cass. 1re civ., 5 April 2005, LawLex202300009816JBJ.

Cass. com., 13 January 2009, LawLex202300009647JBJ.

Cass. com., 29 May 2024, LawLex202400003924JBJ.

Company Law (en cours)

656. Lack of formality

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

656. Lack of formality

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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