SARL Statuts in France: Mandatory Clauses, Capital Rules and Drafting Traps

SARL statuts: the company's constitution, and where drafting goes wrong

The statuts — the articles of association — are the SARL's founding contract and its rulebook for decades. French law imposes a written deed with a short list of mandatory mentions, then leaves the rest to the drafter: transfer approval clauses, the shape of the gérance, majority rules, profit distribution. That freedom is exactly where the traps live. A purpose clause drawn too narrowly forces statutory amendments; a registered-office choice made casually collides with a co-ownership regulation; a capital set at a symbolic figure walks the company into the half-capital-loss procedure in year one; a family name placed in the company name becomes an asset the founder no longer controls. This guide covers the form of the deed, each mandatory and sensitive clause, the duration, purpose, registered office and name, the capital and categories of shares, and the contribution mechanics the statuts must record — with the case law that shows the cost of getting each one wrong.

Private deed or notarial deed?

The founding act must be in writing, and in the great majority of cases a private deed (acte sous seing privé) suffices; every shareholder signs, in person or through an agent holding a special power. The notarial form becomes mandatory when a contribution requires land-registry publication — a building, or a lease of more than 12 years over one. It becomes advisable in two family settings. Between spouses, advantages flowing from the company contract cannot be annulled as disguised gifts when the terms were settled by authentic deed (c. civ. art. 1832-1). And in a company between a parent and presumptive heirs, the authentic deed shields the participating children from claims to restore benefits to the estate. As for practicalities: enough originals are drawn for the registered office and the formalities — a scanned copy is filed on the Guichet unique and the originals are lodged with the registry — and each shareholder receives a copy. A sole shareholder who will manage his own EURL can even adopt the state's model statuts (c. com. art. L 223-1), a shortcut that fits only the simplest situations.

The mandatory mentions — and the clauses that actually matter

The statuts must state the company's form, duration, name, registered office, purpose and capital, plus the valuation of each contribution in kind (c. com. art. L 223-9), the distribution of shares among the shareholders and their paying-up, the deposit of the cash contributions and the closing date of the financial year. The gérant may later harmonise the statuts with mandatory new law, subject to ratification by ordinary decision.

The mentions are the floor. The clauses that decide how the company actually lives are the elective ones: approval (agrément) clauses for share transfers and for heirs on a shareholder's death; the terms of transfers; the purpose; the contributions; single or collegial gérance; whether the gérant can be dismissed at relative majority on a second meeting; the modes of consulting shareholders; the voting rights of usufructuaries; and the distribution of profits. On statute length, experience points to a middle way: ultra-short statuts send everyone back to the code at the first question, while long statuts that copy out the law fall out of date at each reform and cost an extraordinary meeting to fix — short statuts that state the practical rules on every important point are the pragmatic drafting standard.

Duration and corporate purpose

The duration cannot exceed 99 years from registration, renewable by successive extensions of up to 99 years each. Standard practice sets 99 years outright, since early dissolution always remains open to an extraordinary meeting. The extension procedure should be launched a year before the term; if the term slips by, the shareholders can still cure the lapse within one year of expiry. Because a blocking minority can refuse the extension and force dissolution, drafters can insert the clause recommended by the Ministry of Justice: opponents must sell their shares to the company or the other shareholders at an agreed price or, failing agreement, at a price set by expert under c. civ. art. 1843-4.

The purpose (objet social) may be any lawful civil or commercial activity — a SARL with a civil purpose remains a commercial company by form. Insurance, capitalisation and savings activities are barred to the SARL, and some sectors are reserved by law to the SA. An unlawful real activity does not by itself void the company; nullity requires the statutory purpose to be unlawful. Since the PACTE reform, the statuts may also state a raison d'être — obligatory only for companies claiming the société à mission label, which further requires stated social or environmental objectives, monitoring arrangements, independent verification and a declaration to the registry.

The registered office: premises, domiciliation company, or the gérant's home

The registered office is the company's legal domicile: it fixes French law as the governing law when sited in France, the venue for legal publicity, and the competent courts. Third parties may rely on the statutory office, but the company cannot hold it against them if its real seat — where direction is actually exercised — sits elsewhere. Three lawful set-ups exist.

Private premises. The default: the company holds the premises as owner, tenant or sub-tenant, and proves enjoyment at registration by any adequate document — title, commercial lease, an attestation of made-available premises, even a utility bill in the founder's name with a supporting attestation. A parent may house a subsidiary at its own registered office on a simple attestation, without any domiciliation contract — though where the parent is itself a tenant, the lease's clauses on sub-letting and making premises available need reading first.

A domiciliation company. The office may sit in premises shared through a licensed provider. The written contract runs at least 3 months, tacitly renewable, and is declared at the RCS with the provider's prefectoral licence reference; the licence itself is renewed every 6 years. The provider must supply rooms fit for confidential meetings and record-keeping, and an operator working without a licence risks fines of €7,500 for an individual and €37,500 for a company.

The gérant's home. Here the map has four zones. Where the gérant's home is neither in a commune above 200,000 inhabitants nor in the Hauts-de-Seine, Seine-Saint-Denis or Val-de-Marne, the SARL can sit there permanently, receive clients and trade without restriction — provided neither the co-ownership regulation nor the gérant's lease forbids it. In any city, the seat can also stay permanently at the home where the activity is carried on only by the resident occupants, brings in no clients and no goods, and no contractual clause objects (CCH art. L 631-7-3) — note that employing staff at the address defeats this route. Third, in the restricted zones, the mayor can authorise a genuine commercial use of part of the main residence (CCH art. L 631-7-2). And where none of these fit, a temporary domiciliation of up to 5 years is always available, even against the lease or the co-ownership rules, on prior written notification to the landlord or syndicate — with a hard exit: the registrar invites the company to produce a new address 3 months before the deadline and strikes it off if the situation is not regularised.

Transfers later are cheap within France: the gérant himself may move the seat anywhere on French territory subject to ratification by shareholders holding more than half the shares, while a transfer abroad — changing the company's nationality — requires unanimity.

The company name: freedom, and three ways to lose it

The SARL is designated by a company name freely chosen — descriptive, fanciful, or incorporating the name of one or more shareholders. Every act and document addressed to third parties must carry the name immediately preceded or followed by "Société à responsabilité limitée" or "SARL" and the capital amount, together with the SIREN number, the RCS mention with the registry town and the seat — omissions of the identification mentions are a fourth-class contravention, currently a €750 fine. The registrar screens the name's form: only Latin letters and Arabic or Roman numerals, so monetary symbols and the like are refused, and the name must be determinable with certainty.

Substance is where names are lost. First, prior rights: ownership of a name is acquired by first personal and public use, and registration creates no right in it. Adopting an existing or confusingly similar name in a similar field is unfair competition, exposing the company to damages and a forced name change — the courts test similarity of activity and the risk of public confusion. A search on the INPI's databases before adoption is the cheap prevention. Second, trade marks: using a sign identical or similar to a registered mark for identical or similar products, with a risk of confusion, requires the mark holder's authorisation (c. propr. intell. art. L 713-2), and conversely a name or company name with prior standing can defeat a later mark (c. propr. intell. art. L 711-3). Third, the family name: once inserted in the statuts, the founder's patronym becomes a distinctive sign owned by the company. The consequences follow relentlessly — consent to use the name as a company name does not authorise its registration as a trade mark without a separate agreement; incorporation of a family name matching an existing mark is tolerated only while the name-bearer holds control and management functions; and the sole shareholder of an EURL named after himself who sold his shares could not stop the buyer using his name, having failed to forbid it in the sale. The drafting lesson: settle the name's fate — scope of use, mark filings, what happens on exit — in writing at incorporation, not in litigation later.

Capital and shares: the freedom that bites back

The capital is freely set in the statuts — at the extreme, a few euros — and divided into equal shares with no minimum nominal value, which cannot be represented by negotiable securities. The freedom is real; so are its consequences. A weak capital invites creditors to demand personal guarantees from the gérant and his family — replacing the very protection the company was formed for. It also arms the half-capital-loss procedure: as soon as accumulated losses push equity below half the capital, the shareholders must decide within 4 months of approving the accounts whether to dissolve, and if not, regularise within the statutory period — a threshold a symbolic capital can cross in year one.

The case law splits responsibility with precision. Insufficient contributions at incorporation are the shareholders' doing and cannot constitute mismanagement by the gérant. But a gérant who knows the company needs recapitalising to survive and never attempts to obtain a capital increase commits a faute de gestion — one such gérant was ordered to pay €1 million towards an unpaid liability of nearly €2.5 million; by contrast, he cannot be held liable for failing to regularise the equity position where the legal period for doing so had not yet expired when insolvency proceedings opened.

Partial paying-up carries its own quiet penalty. The law allows cash contributions to be paid up at one-fifth, the balance on the gérant's calls within 5 years of registration — but while the capital remains not fully paid, the company forfeits the reduced 15% corporate-tax rate and the deduction of interest paid on shareholder current accounts. For companies wanting elasticity instead, the variable-capital SARL states a subscribed capital, a ceiling above which no free variation may occur — omit the ceiling and any increase requires a collective decision on pain of nullity — and a floor that cannot fall below one-tenth of the statutory capital. Between floor and ceiling the capital moves without formality; each shareholder gains a statutory right to withdraw with his contributions, and exclusion clauses are valid if the decision belongs to the meeting at the majority for statutory amendments, even without limitatively defined grounds.

As for categories: ordinary capital shares can coexist with preference shares carrying priority dividends or liquidation rights — rare in practice — but never plural voting, every share carrying one vote and any contrary clause being deemed unwritten. Industry shares reward a contribution of work, skill or know-how: the statuts fix their terms, they form no part of the capital, they default to the rights of the smallest contributor unless the statuts say otherwise, the contributor owes the company an account of the gains from the promised activity, and the shares die with their holder — neither transferable nor inheritable.

Recording the contributions: cash mechanics and in-kind valuation

Cash contributions must be paid — for the fraction paid up — before the statuts are signed, and the statuts record the paying-up and the deposit. The funds go, within 8 days of receipt, to a notary or a bank — and only credit institutions licensed by the French prudential authority, including French branches of foreign banks, can receive them, so a founder cannot deposit in a bank in his home country. The deposited funds are locked until registration: a bank that lets the gérant draw on them engages its liability, and they are released only against the K-bis. If the company is not formed and registered within 6 months of the first deposit, each contributor can ask the president of the commercial court for leave to withdraw his contribution — or a single agent representing all contributors can reclaim directly from the depositary; a later retry means depositing afresh. Two useful precisions from the case law: whoever subscribed and contributed under the statuts is a shareholder regardless of who financed the contribution, and unpaid capital is a company claim against the shareholder that survives his exit.

For contributions in kind, the statuts must identify each contributor, value each asset and state the shares issued for it. The valuation rests on a report by a contribution auditor chosen unanimously — or appointed by the court on the swiftest founder's application — from the registered statutory auditors or court-listed experts; a sole founder chooses his own. The waiver below the €30,000-per-asset and half-capital thresholds was covered in our incorporation guide; the source's own worked example makes the arithmetic concrete: in a SARL with a capital of €80,000 receiving office equipment, a stock of goods and a leasehold right, the unanimous waiver is available only if no single asset exceeds €30,000 and the three together do not exceed €40,000 — half the capital. Overvaluation is doubly sanctioned: shareholders answer jointly to third parties for 5 years for the retained values where no auditor intervened or his figure was departed from, and fraudulently inflating an in-kind value is punished by 5 years' imprisonment and a €375,000 fine. Undervaluation is not safe either — the tax administration can reassess the duty base or treat the gap as a disguised gift to the co-shareholders.

Clause by clause: the drafting checklist

Frequently asked questions

Key takeaways