French Commercial code
In forceIf, as a result of losses recorded in the accounting documents, the company's shareholders' equity falls below half of the share capital, the Board of Directors or the Management Board, as the case may be, is required, within four months of the approval of the accounts which showed the loss, to convene an Extraordinary General Meeting to decide whether the company should be wound up early.
If the company is not wound up, it must, no later than the end of the second financial year following that in which the losses were recognised, restore its shareholders' equity to a value at least equal to half the share capital or, subject to Article L. 224-2, to reduce its share capital by the amount necessary to ensure that the value of the shareholders' equity is at least equal to half of its amount.
In both cases, the resolution adopted by the general meeting is published in accordance with the procedures laid down by decree in the Conseil d'Etat.
If, before the deadline referred to in the second paragraph of this article, the shareholders' equity has not been reconstituted to a value at least equal to half of the share capital while the company's share capital exceeds a threshold set by decree in the Conseil d'Etat according to the size of its balance sheet, the company is required, no later than the close of the second financial year following this deadline, to reduce its share capital, subject to Article L. 224-2, to a value less than or equal to this threshold.
When, in application of the fourth paragraph of this article, the company has reduced its share capital without its equity having been reconstituted and subsequently carries out a capital increase, it shall bring itself back into compliance with the provisions of the same fourth paragraph before the close of the second financial year following that in which the increase took place.
In the absence of a meeting of the general meeting, as in the case where this meeting was unable to deliberate validly on final notice, any interested party may apply to the courts for the dissolution of the company. The same applies if the provisions of the fourth paragraph have not been applied. In all cases, the court may grant the company a maximum period of six months to rectify the situation. It may not order the dissolution of the company if, on the day on which it rules on the merits of the case, the situation has been regularised.
The provisions of this article do not apply to companies in safeguard or receivership proceedings or benefiting from a safeguard or receivership plan.
