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Company Formation in France

You will need to register the business (La demande d'immatriculation). This takes place at one of the numerous French equivalents to Companies House (Centre de Formalités des Entreprises - CFE) depending on the type of business activity:

• Chambre de Métiers - for craftesmen
• Chambre de Commerce et d'Industrie
• Chambres d'Agriculture - for farmers
• URSSAF (Union de recouvrement des cotisations de sécurité) - for professions or employers of a business that are not listed on the Register of Trades or the Commercial and Companies Register
• Greffe du Tribunal du Commerce (Clerk of the Commercial Court) - for sales representatives

If you are not sure which CFE to visit, you can ask your local Chambre de Commerce et d'Industrie and they will be able to help you.

You will need to take the following documents with you to the CFE:

• Valid Passport
• Utility Bill (telephone bills not accepted)
• Marriage Certificate (if applicable)
• Check with your CFE for other documents they require

The documents necessary for admission are signed and filed with the CFE. They submit the documents to the Greffe du Tribunal de Commerce (Clerk of the Commercial Court). Your company will be entered in to the Commercial and Companies Register. An individual trader will be registered in the Registre du Commerce (Trade Register). A nominal fee will be charged for this service.

The relevant CFE will pass on your paperwork to the appropriate social security offices, local tax office (Centre des Impts) and to l'Institut National de la Statistique et des Etudes Economiques - INSEE (National Institute of Statistics and Economic Studies). INSEE will then issue you with your NAF code (code given to the prinicipal activity of the business), SIREN and/or SIRET numbers (company ID numbers).

To find out the fees for registering a business, to search for existing business names, to find the location of your local Tribunal de Commerce, to obtain the toolkit for Entrepreneurs, and special offers go to their website: www.infogreffe.fr/infogreffe/index.jsp, it is very informative.

Incorporation in France is a 5-stage process, as follows:

• Check that the company name is not in use already with the INPI. This takes a day.
• Deposit the initial capital within 8 days of collecting all funds. This takes one day.
• Publish a company incorporation notice; this takes one day and costs approximately Euro 150.
• Request for the company's registration with the Centre de Formalités des Entreprises (CFE). This process takes 4 days and costs approximately Euro 130.
• Purchase the company books and have them stamped and initialled by a clerk of the commercial court. This takes one day, and runs simultaneously to stage 4.

What are the business classifications?

Entreprise Individuelle - Sole Trader

There are three types of classifications, which are:

• Professional liberals (lawyer, doctor, architect, accountant, etc.)
• Commerants individuals (shopkeepers, traders)
• Artisans (joiner, builder, craftsmen, decorator

Sole traders in certain professions will need to have the necessary qualifications, which are recognised in France. These qualifications will have to be translated by a sworn translator. It is a requirement that all professions will have to attend a short business management course.

Sole traders have no protection of limited liability and cannot claim an unemployment benefit if the business fails. Social security payments must be paid even if the business has no income or profit.

Entreprise Unipersonnelle Responsabilité Limitée EURL - Private Limited Company under sole ownership

This type of business enables an individual entrepreneur to have limited liability. The initial business outlay can be no less than 7 500 Euros capital. The liability is limited to the initial capital. There are more legal requirements and accounting for this type of business.

Société Responsabilité Limitée SARL - Limited Company

There must be at least two and not exceeding fifty shareholders, who can be individuals or companies either French or foreign. Again the share capital must be a minimum of 7500 Euros and this capital must be paid at the time of incorporation.

The liability is limited to each shareholders initial capital. A SARL is managed by one to two managers. If they are minority shareholders they are usually classed as salaried employees for tax and social security contributions.

Société Anonyme SA - Limited Company controlled by shares

A minimum of seven shareholders are required to start this type of business. Each shareholder must invest a minimum share capital of 37 000 Euros or 225 000 Euros is required if the business has made a public offering. The shares must be fully subscribed.

Micro-entreprise - smallest type of business

This type of company is restricted to companies that have a small turnover and are therefore not subject to VAT (TVA). A micro enterprise is reserved for traders and artisans who are usually self-employed.

Trs petite entreprise (TPE) - Very small business

This type of companies employs less than 10 salaried staff and the annual turnover is less than 2 million Euros per year.

Petite entreprise (PE) - Small Business

Employs between 10 and 49 salaried staff and the annual turnover is less than 10 million Euros per year.

Moyenne entreprise (ME) - Medium sized business

Employs between 50 and 249 salaried staff and the annual turnover is less than 50 million Euros per year.

Grande entreprise - Large business

Employs 250 plus salaried staff and the annual turnover is less than 50 million Euros per year.

Groupe d'entreprises - Group of companies

The terminology Small to Medium size Enterprise - SME (PME) is used in France and has the same definition.

Do not worry which category you fit into as the CFE where you register the business will tell you.

Offshore Companies

By choosing to incorporate an offshore company, business owners and investors can set-up a business outside the jurisdiction of its operations. Offshore companies are traditionally, but not exclusively, incorporated for lower fees and taxes. Business owners must abide the regulations of the offshore jurisdiction, and must not trade within the jurisdiction.

The benefits are vast. As aforesaid, reduced tax and fees are often big factors when considering offshore incorporation. A company may also choose and offshore location to:

• Simplify set-up and maintenance - entrepreneurs may find bureaucracy and red tape less of an obstacle in offshore jurisdictions
  
• Assume anonymity - the names of owners and directors are not for public record, and references to the company may only be made in its registered agent
  
• Ensure legal protection - for instance, some jurisdictions favour corporate governance, meaning a company is only liable to offshore laws as opposed to those in its areas of operation
  
• Protect assets - business owners may opt to arrange their assets and transactions in such a way that protects them from liability
  

Characteristics of an offshore company:

• Memorandum and Articles of Association
  
• Certificate of Incorporation
  
• Registered Office/Agent
  
• Shareholders / Members
  
• Directors / Managers
  
• Company secretary
  
• Statutory Register
  
• Bookkeeping
  

Traditional locations for offshore incorporation are tax havens, such as the British Virgin Islands, Panama and Monaco. Other favoured areas include India, the Bahamas, Dubai, the Cayman Islands, Cyprus, Seychelles, Marshall islands, Delaware, Turks & Caicos Islands, Hong Kong, Jersey, Guernsey and the Isle of Man.

Can I convert a business to a different type of business after I have started trading?

It is possible but there may be restrictions and certain rules will apply. As tax and legal requirements might change and could be costly, it may be better to start an entirely new business.

How do you buy and sell shares connected to a business?

For a SARL the shares can only be transferred to an existing shareholder and the share is registered in the Commercial and Companies Register within one month of execution. A Notaire can assist you with this. (Please see the Notaire section). 4.8% Stamp Duty is payable on the share transfer.

For a SA the shareholders can transfer their shares freely unless the status of the shares require the board of directors have to approve the transfer. No Stamp Duty has to be paid on the transfer of shares in a SA.

What professions have special regulations for non-French citizens?

Some professions/activities are restricted to French citizens and certain activities require particular qualifications. It is important to check whether your profession is listed. You can also apply for your qualifications to be translated.

The Centre International D'Etudes Pédagogiques (CIEP) website is very useful site to search your profession and how to get your qualifications translated.

How do I go about buying or leasing an existing business or commercial property?

Commercial Law is complicated, as most things are in France. French Commercial Law consists of different components, which are dealt with in different transactions i.e. the commercial property itself is classed as the actual walls of the building and the business, which includes the existing clients, trade names, which is known as the fonds de commerce. Avocats (lawyers) and Notaires (notary) are responsible for drawing up the necessary contracts for the sale and purchase of a fonds de commerce.

What about buying or leasing the commercial property?

The process is similar to buying or leasing a residential property. An estate agent (agent immoblilier) and notaire will help you find a premise.

How do I claim for a court order for debtors?

Regardless of the amount owed, you can apply for a court order but the debtor must be another company or merchant. The claim must be contractual (e.g. unpaid invoice, rental agreement, etc.) and must be for a specific amount and have the applicable documents to support the claim. You can apply for a court order to the Registry of the Commercial Court (RCS) where the debtor is registered. These courts are located throughout France with different jurisdictions. The order is presented to the presiding judge.

What happens if a company cannot pay their debts?

The company must file for a declaration of suspension of payments with the RCS. Submission of this declaration must be within 45 days of the date of the suspension of payments so that Court proceedings can take place to start liquidation or court supervised recovery. These Court proceedings apply to all types of businesses, large or small.

What if my activity is on an "odd job" basis?

Chéque Emploi Associatif is a simple service, which is free and secure: www.cea.urssaf.fr/cea/home.jsp

What is a notaire?

Notaires are responsible to the Ministry of Justice. They are public officers who also work independently. Notaires deal with all legal matters in relation to the following:

• Family e.g. marriage, divorce, adoption, etc
• Home e.g. Purchasing/selling, letting, funding, etc
• Estate e.g. Organising and transferring
• Business e.g. Starting a Business, Commercial and Rural Leases, Agricultural businesses, Martial Regimes for business owners, contracts, etc

Visit the Notaires de France website to find a notaire in your area.

Can I sell my UK franchise/business opportunity in France?

It is possible to sell your UK Franchise in France. There are many things to consider e.g. to decide if French or UK law will apply, will your franchisees have to speak English - the paperwork will be French as your Franchisee will have to start a French business to start trading, will you be able to commute easily to visit your franchisees, etc. You can contact the Fédération Franaise de la Franchise. They have English speaking staff that can assist you.

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