HOW TO CREATE A STARTUP IN FRANCE?
Would you like to set up a start-up in France, but don’t know which legal form to choose? Would you like to know the minimum share capital and incorporation costs? Here are our instructions to help you make sense of the situation, before setting up your own business in France.
What is a startup?
If a startup had to be defined, it could be described as an innovative new company with high growth potential. Its innovative nature stems from the contribution of a new technology, or a new methodology applicable to a defined sector.
What are the possible legal forms for my startup?
Subject to the conditions prescribed for the exercise of certain regulated activities, you may exercise your activity :
- in individual form (creation of a sole proprietorship in France) ;
- or in the form of a company (incorporation of a trading company).
The different legal statuses of companies in France are governed by the provisions of the French Commercial Code.
In practice, startup founders opt for the most legally flexible corporate form, in terms of both shareholding and governance.
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Share ownership
Firstly, some corporate forms require a minimum number of partners/shareholders, so they cannot be set up by a single entrepreneur. SASs and SARLs can be single-member companies, i.e. with just one partner or shareholder, whereas a SA must have at least two shareholders.
Secondly, some corporate forms allow for the issuance of different classes of shares, and enable different types of shareholder to be grouped together. SARLs issue shares and cannot issue bonds, while SASs can issue different classes of shares. It is therefore important to choose the form that will facilitate the entry and exit of associates.
Finally, a minimum capital may be required depending on the corporate form chosen. There is no legal minimum for SAS.
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Governance
Some corporate forms are more complex to set up. For example, SAs have a more complex governance system (Board of Directors or Supervisory Board and Management Board) than SASs (Chairman) or SARLs (Managing Director).
In view of these factors, the SAS is the most suitable corporate form for startup founders.
What is the minimum share capital for an SAS?
There is no minimum share capital required to create an SAS in France. It is up to the associates to define this freely in the bylaws.
The share capital of an SAS can be made up of contributions :
- in cash (sums of money) ;
- in kind (movable and/or immovable property).
Good to know:
A SAS can issue inalienable shares resulting from industrial contributions.
In the case of contributions in kind, an auditor must be appointed to determine the value of the contribution.
Do I have to pay up the share capital when I set up my business?
In SAS, shares representing cash contributions must be paid up to at least half (1/2) of their par value at the time of capital subscription.
The surplus is paid up in one or more instalments, within a maximum period of 5 years from the date of registration in the Commercial Register (RC).
Do I need to appoint a statutory auditor to set up a startup?
Since the Pacte Act of May 22, 2019 came into force, commercial companies have been obliged to appoint a statutory auditor as soon as they exceed two of the following 3 thresholds: 4,000,000 euros in balance sheet, 8,000,000 euros in sales excluding tax and 50 employees.
What do I have to do before I can submit my incorporation file?
To set up a company in France, you must first complete certain formalities:
- check whether the activity is regulated;
- identify the company’s head office and sign a commercial lease;
- draw up the company’s articles of association (name, registered office, corporate purpose, amount of shares, duration of the company, identity of partners or shareholders, etc.);
- to pay up the share capital ;
- contact a bank to freeze funds (if applicable).
What are the formalities involved in setting up a company?
You must submit your application to the CFE (Centre de formalité des entreprises), which will act as your liaison with the authorities. The CFE takes care of forwarding the file to the appropriate authorities: the tax authorities, Urssaf, the commercial court clerk’s office, Insee, etc.
What documents must be filed with the CFE?
Your constitution file will consist of the following documents:
- original of the company’s articles of association ;
- minutes appointing the manager(s) when these appointments are not included in the articles of association;
- completed M0 form ;
- certificate of publication in a legal gazette of the notice of company formation;
- certificate of deposit of share capital when required by the legal form chosen;
- proof of registered office ;
- identity papers, sworn statement of non-conviction and certificate of parentage for manager(s);
- authorizations obtained when the company’s activity is regulated;
- proof of the auditor’s registration on the official list and letter of acceptance of appointment (if applicable).
What happens after I submit my application to the CFE?
Filing the application with the CFE gives rise to :
- Company registration in the national register of companies and establishments (Sirene);
- Issuance of a Siren identification number and APE code by Insee;
- Allocation of a VAT number by the corporate tax department;
- Registration of the company in the Trade and Companies Register (RCS);
- Obtain a K-bis extract from the commercial court clerk’s office.
Good to know:
The following compulsory formalities are not handled by the CFE: domiciliation of the company, opening a bank account, chartered accountancy services, declaration of beneficial owners, house with Pôle Emploi, membership of an occupational medicine center, membership of a compulsory supplementary pension fund for employees, protection of your brand.You can read our focus on protecting your brand in France by following this link: …
How much does it cost to set up a startup in France?
Creating a start-up generates the following costs:
- RCS registration: 37.45 Euros ;
- Publication in a legal gazette: approx. 250 euros ;
- Rental or domiciliation costs for your head office: variable depending on the premises to be rented.
In addition to these costs, there are fees for professional advice (lawyers, chartered accountants, etc.), particularly for drawing up the company’s articles of association.
How long does it take to set up a company in France?
In practice, the time it takes to set up a startup varies according to whether the entrepreneur calls on the services of a professional (a lawyer, for example) or takes care of the formalities himself.
The time required to complete the legal formalities varies from one to two weeks.
Calling on a professional can save you a considerable amount of time and, above all, provide you with the best advice for making the choices best suited to your project.
The creation of your startup therefore requires careful preparation, and you shouldn’t neglect the documents you need to provide for the creation of a company. Don’t hesitate to ask for help to draw up your articles of association, and create your startup in France.
The creation of your startup therefore requires careful preparation, and you shouldn’t neglect the documents you’ll need to set up a business in France. Don’t hesitate to ask for help to draw up your articles of association, and create your startup in France.
