Approving and Filing a SARL's Annual Accounts

Every SARL must approve its annual accounts in a shareholders' meeting within six months of the year-end, then file them with the commercial court registry within one month if on paper, or two months electronically. The manager prepares the inventory, the annual accounts and - unless the company is small enough to be excused - the management report, and faces a €9,000 fine for failing to draw them up or to submit them for approval. This guide covers the calendar, what has to be prepared and sent, how the result is allocated, the legal reserve and the rules limiting distributions, and the confidentiality options that keep small companies' figures out of public view.

The SARL annual accounts timeline

The deadlines interlock, and missing one usually pushes the meeting itself out of time. For a SARL without a statutory auditor closing its year on 31 December and holding its meeting on 30 June, the sequence runs as follows.

• 26 May - recommended, and at least 35 days before the meeting: send notice of the planned meeting date to shareholders who asked to be informed, by ordinary or registered letter, or by email where the shareholder gave prior written agreement.
• 5 June - 25 days before the meeting: the deadline for shareholders holding, alone or together, at least 5% of the shares to send requests, by registered letter with acknowledgment or by email where agreed, to add items or draft resolutions to the agenda.
• Before 15 June - or before the convening: close the annual accounts and, where applicable, the consolidated accounts; prepare the management report where one is required; draft the text of the resolutions.
• 15 June - at least 15 days before the meeting: convene the shareholders by registered letter or email, with the balance sheet, the profit-and-loss account, the notes, the management report where required and the text of the proposed resolutions annexed - plus, where applicable, the report on regulated agreements, a proxy form, and the consolidated accounts with the group management report.
• Between 15 and 30 June - the inventory is held at the registered office at the shareholders' disposal, though they cannot take a copy, and shareholders may put written questions to the management.
• Before 30 June - mandatory, and within six months of the year-end. Where the meeting cannot rule on the accounts by then, an application must be made to the president of the commercial court for the six-month period to be extended.

Two adjustments change that calendar. Where the SARL has a statutory auditor, the balance sheet, profit-and-loss account, notes, management report and any consolidated accounts and group report must be held at the registered office at the auditor's disposal at least one month before the convening - so at least 45 days before the meeting itself. And where the company employs at least 50 people, the documents made available to shareholders must be placed in the economic, social and environmental database for the works council's own consultation on the company's situation, unless a company-level or works-council agreement provides otherwise.

The meeting cannot be held before the fifteen-day communication period expires. Where the manager does not convene it, any interested person or the public prosecutor can apply to the president of the court, in summary proceedings, for an order compelling the managers to convene - under penalty if necessary - or appointing a representative to do it (C. com. Art. L. 223-26). The convening mechanics themselves are set out in shareholder decisions in a SARL.

What the manager must prepare

The company's results must be assessed at the end of each financial year, which generally runs twelve months. At each year-end the managers must draw up the inventory - the verification of the existence and value of every asset and liability at the closing date, established once a year - the annual accounts, meaning the balance sheet, the profit-and-loss account and the notes, and the written management report where one is required. Where there are several managers, they must agree between them.

The sanction is criminal and it applies twice over. A fine of €9,000, with no prison sentence, applies to managers who have not drawn up these documents at the end of each financial year (C. com. Art. L. 241-4) - and the same fine applies to a manager who has not submitted the inventory, the annual accounts and the management report to the shareholders, or to the sole shareholder, for approval (C. com. Art. L. 241-5).

Two further checks fall on the manager. Where the SARL controls one or more companies, exclusively or jointly, it must establish and publish consolidated accounts and a group management report (C. com. Art. L. 233-16) - unless it is itself controlled by an undertaking that includes it in published consolidated accounts - in which case it must have at least two statutory auditors, and the consolidated accounts go to the shareholders at the same time as the annual accounts. And SARLs that at a year-end have 300 employees or more, or net turnover of at least €18 million, must also prepare a financing table and a forward financing plan (C. com. Art. L. 232-2).

When the management report can be skipped

Companies in the small enterprise category are not required to prepare a management report (C. com. Art. L. 232-1), and the exemption applies from the close of the company's very first financial year. Certain categories must prepare one whatever their financial performance or headcount - credit institutions, and companies whose activity consists in managing participating interests or securities, among others.

The thresholds moved recently, so the applicable set depends on the year. For approvals of accounts for financial years closed at the latest on 31 December 2023, a small enterprise is one that does not exceed two of three thresholds: €6 million balance-sheet total, €12 million net turnover and 50 employees. For financial years opened from 1 January 2024, a decree of 28 February 2024 raised them to €7.5 million, €15 million and 50 employees - with micro-enterprises at €450,000, €900,000 and 10 employees, and medium-sized enterprises at €25 million, €50 million and 250 employees. A SARL closing on 31 December that qualifies as small under the new thresholds and wants to present simplified annual accounts can only do so in 2025, for the approval of its 2024 accounts.

One trap deserves attention before relying on the exemption: check the articles. Where a small company's articles require a management report, whether the manager is excused depends on the drafting. If the clause states that the report must be prepared in accordance with Article L. 232-1 of the Commercial Code, the manager is excused. If the clause requires a management report without further precision, the report must still be prepared despite the reform.

Two content requirements apply where a report is prepared. SARLs with a statutory auditor must give information on their supplier and customer payment periods by due date, showing the number and total amount of invoices received or issued that were unpaid and overdue at the year-end, broken down by lateness bracket, with the percentage of late items against total purchases and sales - or, by way of derogation, the lateness experienced during the year rather than at the closing date. Amounts may be published excluding or including tax, provided the choice is stated, and lateness is measured against contractual payment terms or, failing those, the applicable statutory ones. The auditor must attest the sincerity of that information and its consistency with the accounts, and must transmit that attestation to the minister for the economy where there are repeated and significant failures and the company has at least 250 employees together with turnover of at least €50 million or a balance-sheet total of at least €43 million. Separately, SARLs subject to company tax must state in the report and the resolutions the amount of dividends distributed over the three preceding financial years, indicating for each whether the distributed income qualified for the 40% allowance - and stating expressly where no dividend was distributed, on pain of a tax penalty (CGI Art. 243 bis).

Approving the accounts: majority and voting

There is no quorum for the annual meeting approving the accounts. Each share carries one vote, and the ordinary majority applies: on the first consultation, half of all the shares plus one - the absolute majority, calculated on the whole of the capital and not on the shares of those present or represented, so absent and abstaining shareholders influence the outcome. A shareholder holding or representing half the shares plus one controls the decision alone. In a SARL with a capital of €7,500 divided into 750 shares, the shareholder holding 376 shares has the majority - and so does the holder of 200 shares acting as proxy for another holding 176. Where that majority is not reached, and unless the articles provide otherwise, the shareholders are consulted a second time and the decision is taken by a majority of the votes cast. The articles may impose a higher majority for ordinary decisions, which must then be reached.

Three ownership situations change who casts the vote. Where the shares are split between a usufructuary and a bare owner, the voting right belongs necessarily to the usufructuary for decisions concerning the allocation of profits - for other decisions it can be conferred on them by the articles or by agreement with the bare owner. Where shares are jointly owned, the articles usually require the co-owners to be represented by one of them or by a single representative, with a court appointment where they disagree; even where a representative is appointed, the co-owners retain the right to attend the meeting, and their vote must be cast as a single block. A tacit mandate to represent can be inferred where a co-owner did not claim ignorance of the meetings and raised no objection - but it can only cover acts of administration, so the courts must examine whether the resolutions voted fell within that category. Where shares are pledged and the pledge has been notified to the company, the voting right stays with the owner of the shares as long as no forced sale has been ordered; for pledges concluded since 1 March 2007, the pledgee can, on the debtor's default, become owner or transferee of the shares and vote in that capacity.

Allocating the result: the legal reserve and distributable profit

The profit or loss of the year appears on the profit-and-loss account as the difference between income and expenses after depreciation and provisions. What can actually be distributed is narrower.

Distributable profit is the profit of the year, reduced by prior losses and by the sums to be placed in reserve under the law or the articles, and increased by the profit brought forward (C. com. Art. L. 232-11). Distributable sums are the distributable profit plus the reserves the meeting has at its disposal - and where the meeting decides to distribute sums drawn from such reserves, the decision must expressly state which reserve accounts the sums come from. Dividends are drawn as a priority on the distributable profit of the year. It is the manager who puts a resolution proposing a dividend amount to the vote; the meeting can amend it, including by asking that a higher figure be put to the vote.

The legal reserve

On pain of nullity of any contrary deliberation, at least a twentieth of the profit of the year - reduced where applicable by prior losses - is set aside to form the legal reserve (C. com. Art. L. 232-10). The obligation ceases once that fund reaches a tenth of the capital stated in the articles, and it restarts on a capital increase, continuing until the new limit is reached.

With a thin capital the reserve is correspondingly negligible: for a capital of €1,000 the legal reserve is €100, and for a SARL formed with a capital of €1 it is ten cents. That is worth knowing before treating the legal reserve as a meaningful protection.

Where the profit is too small to be usefully distributed, or where a residual balance is too small to divide conveniently after calculating a dividend, the meeting can decide to carry it forward. That is an accounting operation: the sum carried forward is taken up in the following year and added to the distributable profit.

The three limits on distributing

Even with a profit, three rules can block a distribution. Formation expenses - incorporation costs, initial establishment costs, capital-increase costs - and applied research and development costs shown on the balance sheet must be written off before any dividend can be paid, unless the company holds free reserves at least equal to the amount remaining to be amortised (C. com. Art. L. 232-9); incorporation costs are amortised before any distribution and within five years at the latest, and capital-increase costs at the latest by the end of the fifth financial year following the one in which they were incurred. Equity is the second limit: outside a capital reduction, no distribution can be made where the equity is, or would become as a result of the distribution, lower than the capital increased by the reserves that the law or the articles do not allow to be distributed. And anticipated drawings are a third: taking a sum in advance on profits whose excessive amount imperilled the company and led it to insolvency has been held to be a management fault.

Where dividends are paid that do not correspond to genuinely realised profits, repayment can be demanded from the shareholders who received them, and that action is time-barred after three years from the distribution (C. com. Art. L. 223-40). The immediate attribution of profits outside a meeting - an appropriation agreed between the shareholders - produces fictitious dividends whose repayment must be required.

Interim dividends

Interim dividends can be distributed before the accounts are approved, but only on strict conditions. A balance sheet drawn up during or at the end of the year and certified by a statutory auditor must show that, since the close of the previous year and after the necessary depreciation and provisions, less any prior losses and the sums to be placed in reserve under the law or the articles, and taking the profit brought forward into account, the company has made a profit. The interim dividends cannot exceed that figure (C. com. Art. L. 232-12).

Three practical points follow. It is the managers who have authority to decide the distribution of an interim dividend and to fix its amount and date (C. com. Art. R. 232-17). In a SARL without a statutory auditor, an auditor must be appointed with the special task of certifying the interim balance sheet - and where the company does have one, their report certifying the distributable profit must predate the distribution decision. And interim dividends cannot be distributed for year N+1 while the accounts for year N have not yet been approved.

Allocating losses

Losses are first set against profits carried forward. Failing that, in SARLs subject to company tax they are carried forward pending a profitable year. They can also be charged against profits brought forward from earlier years or against reserves - including the legal reserve, since the first purpose of reserves is to absorb losses. Where profits or reserves already taxed are used to absorb losses, the losses so absorbed remain fiscally deductible from later profits without time limit. Two sources are restricted: a free revaluation surplus cannot be used to offset losses unless it has first been incorporated into the capital, and issue or contribution premiums can be used to offset losses in whole or in part where the shareholders so decide.

Filing the annual accounts with the registry

Every SARL must file, on paper or electronically, in a single copy, with the commercial court registry for annexing to the trade and companies register (C. com. Art. L. 232-22): the annual accounts and, where applicable, the consolidated accounts, the group management report and the auditors' reports on both, together with any observations on changes the meeting made to the accounts submitted to them; and the proposed allocation of the result submitted to the meeting or the sole shareholder, with the allocation resolution voted or the allocation decision taken.

The management report is not filed - but it must be held at the disposal of anyone who requests it. Where approval is refused, a copy of the meeting's deliberation or the sole shareholder's decision is filed within the same period.

The deadlines differ by medium: one month from the meeting for a paper filing, two months for an electronic one (C. com. Art. R. 123-111). Since 1 January 2023 electronic filing goes through the single-window business portal, and paper filing remains possible. Three refinements are worth knowing. Where a company's own accounts and its consolidated accounts are sent to the registry together, the registrar must distinguish them and make separate filings and publications for each. The ordinary meeting can authorise the auditors, on the manager's proposal, to send their reports directly to the registry within the deadlines binding the company - an authorisation that can be ended in the same form. And a company headquartered abroad with a branch in France files the accounting documents it prepared, had audited and published in its home State, within the period that legislation provides; the branch itself files nothing.

The consequences of not filing are real. A company that has not filed its accounts commits an irregularity that its statutory auditor must reveal to the public prosecutor and to the company's principal organs, and report to the next meeting of its deliberative body. Failure to file is punished by a fine of €1,500, raised to €3,000 on a repeat offence (C. com. Art. R. 247-3). The courts have refused to excuse it on commercial grounds: the manager of a SARL operating a jewellery business argued that filing exposed the company to thieves who select victims from the figures published at the registry, and obtained an acquittal - which the Cour de cassation quashed, holding that a merely possible danger does not justify committing the offence.

Late filing does not, however, automatically expose the manager personally to third parties. Where a couple sought to recover some €46,000 from a manager because the SARL's accounts for two years had not been filed when they contracted with it - arguing that they could not know its cash position and would have used another business - the Cour de cassation quashed the condemnation: a contravention, not being an intentional offence, does not constitute the intentional fault of particular gravity separable from the functions that alone engages a SARL manager's personal liability towards third parties, and nothing showed the additional cost had been caused by the late filing. That threshold is examined in manager liability.

Once filed, the registrar publishes a notice of the filing in the official bulletin, and registrars must deliver to any applicant, at that applicant's cost, copies or extracts of the acts filed as annexes to the register. Where a company uses the confidentiality options below, third parties are informed of that fact by a mention the registrar inserts in the bulletin notice.

Keeping the accounts confidential: the three options

Three graduated options exist, each tied to a size category, and each requiring a declaration at the time of filing.

Micro-enterprises can declare that the annual accounts they file will not be made public to third parties (C. com. Art. L. 232-25). Judicial and administrative authorities, the Banque de France, and legal persons that finance or invest in businesses directly or indirectly - or that provide services to those legal persons - keep access to the full accounts. For approvals of accounts for years closed at the latest on 31 December 2023, the category covered companies not exceeding two of three thresholds: €350,000 balance-sheet total, €700,000 net turnover and 10 employees; for years opened from 1 January 2024, €450,000, €900,000 and 10 employees.

Small enterprises can choose not to make their profit-and-loss account public when filing (C. com. Art. L. 232-25). The thresholds are the ones set out above - €6 million, €12 million and 50 employees for years closed by 31 December 2023, and €7.5 million, €15 million and 50 employees for years opened from 1 January 2024. The same authorities and financing bodies retain access. Companies using this option must accompany the filing with a confidentiality declaration drawn up in the prescribed form.

Medium-sized enterprises can opt for a simplified publication of their balance sheet and notes.

Three limits apply across the options. The option does not apply to certain enterprises - credit institutions and financing companies, insurance and reinsurance undertakings, entities whose securities are admitted to trading on a regulated market, and those appealing to public generosity. A company belonging to a group cannot benefit from the profit-and-loss confidentiality either, even where it is exempt from preparing and publishing consolidated accounts: as soon as a company controls one or more other companies - by holding the majority of voting rights directly or indirectly, by appointing the majority of the administrative, management or supervisory bodies for two successive years, by holding a dominant influence under a contract or clauses of the articles, or by sharing control of a joint subsidiary with a limited number of shareholders such that decisions result from their agreement - it can in no case benefit from confidentiality of its profit-and-loss account. And the request must be made when the accounts are filed: no provision allows it to be deferred, so a small enterprise that files without asking for confidentiality of its profit-and-loss account cannot change its mind some months later.

Where a company with a statutory auditor uses any of the confidentiality options, the auditor's report need not be made public - but small and medium-sized enterprises must accompany the documents made public with a mention stating whether the auditor certified the accounts with or without reservations, whether they refused or were unable to certify them, and whether their report refers to any matter to which they drew particular attention without qualifying the certification (C. com. Arts. L. 232-25 and L. 232-26).

Frequently asked questions about approving and filing SARL accounts

This article states general principles of French law as at its date of publication and is provided for information only. It does not constitute legal or tax advice and creates no lawyer-client relationship. Figures, rates and thresholds evolve; verify them against the texts in force before acting, and take advice on your specific situation.