France

SETTING UP IN BUSINESS

Introduction

France has been slower than many of its EU counterparts to embrace a truly liberal business culture. At the same time, it has aggressively sought to attract foreign investment - and with considerable success. One result is that it is now very simple and straightforward to open a company in France, although local advice is essential in order to ensure compliance with legal and financial regulations.

What is the best way to open a company in France?

There is no fixed pattern. Options range from opening a small representative office – a bureau de liaison – through to acquiring an existing company or setting up a new business from scratch.

Is a foreign-owned company at a disadvantage?

To some extent. Unless foreign identity is part of the marketing strategy, most foreign investors prefer to adopt a fairly low profile and project a French image. An easy way to do this is simply to acquire a French company.

What is the most common type of company in France?

There are three main kinds of business entity in France:

• business corporation – Societé Anonyme (SA)
• limited company – SARL
• simplified stock corporation - SAS

What are the requirements for an SA company?

• the minimum share capital is €37,000, of which at least half must be paid up
• the company must have at least seven shareholders
• shareholders are liable up to the limit of their capital contribution
• accounts must be audited in line with statutory requirements
• top managers are treated as employees for tax and social security purposes

What are the requirements for a SARL company?

• the minimum share capital was recently reduced to €1.00
• the minimum number of shareholders is one
• shareholders are liable up to the limit of their capital contribution
• accounts must be audited in line with statutory requirements
• top managers have more onerous tax and security rules than SA managers

What is an SAS company?

The Societé Par Actions Simplifieé (Simplified Stock Company) is a relatively new type of entity in France. It is a vehicle for creating a joint venture between a French company and a foreign partner. Previously, French companies had found it difficult to enter into joint-venture relationships with foreign companies because of the rigidity of French corporate law. However SAS companies are increasingly finding favor with foreign investors, particularly in the USA, who wish to set up subsidiaries in France.

What are the requirements for an SAS company?

• the minimum share capital is €37,000 of which half must be paid up
• the company must have at least two shareholders and a chairman
• shareholders are liable up to the limit of their capital contribution
• there is no need for a board of directors

How easy is it to recruit staff?

Recruitment itself is reasonably straightforward in France but labor laws are very complex, much more so than in most other EU countries. Employment contracts for a fixed term are only permissible in a limited number of situations. Certain collective agreements negotiated at national level are automatically applicable to certain commercial and industrial sectors. In other sectors, such agreements are only applicable when agreed to by the employer. Collective agreements cover all workers, whether or not unionized. It is essential to take legal advice before offering or entering into any kind of employment contract. We have a carefully selected team of legal and recruitment specialists based in France.

What is the regulatory environment like?

France has a well-developed legal and regulatory system broadly similar to that in other EU member states. There are few restrictions on setting up companies, except in certain areas such as banking and insurance and there is no restriction on imports or capital from abroad. However state ownership is still a significant feature of the French economy, particularly in infrastructure industries and some restrictions still apply. Furthermore, the French legal system is slow and expensive, which underlines the importance of securing good legal advice from the outset. Our team of French legal specialists can help, so please contact us for more details.

Are there financial incentives available – and what about banking facilities?

France has a world-class international banking network, and there is a wide range of financial institutions with expertise in arranging financial transactions and transfers. The first step in opening a French company should be to establish a local bank account – we can arrange this for you.

In addition to commercial bank loans, various types of assistance to new businesses may be available. These grants and loans from local authorities help with finding sites, shared cost access to support services, tax incentives and grants for innovative new companies.