Kb Corporate Law Fr

Knowledge Pack — French Corporate Law

Scope

This pack covers French corporate law. France is particularly relevant in the MENA context because:

1. Lebanese commercial law (Code de Commerce) is directly derived from French law — understanding French law illuminates Lebanese corporate structures
2. Egyptian civil code (Law 131/1948) was drafted with significant French influence
3. Many MENA-connected families and businesses maintain French holding structures
4. OHADA (francophone Africa) corporate law is also French-influenced

Primary legislation

Principal entity types

SAS (Société par Actions Simplifiée) — most versatile

The SAS is the dominant vehicle for private companies, subsidiaries, JVs, and holding structures. Its defining feature is extreme contractual flexibility in governance.

• Minimum share capital: no minimum (EUR 1 permitted)
• Shareholders: 1+ (SASU = single-shareholder SAS)
• Management: Président (mandatory) + any additional governance structure the statuts (articles) provide
• Shareholders can design any governance structure in the statuts: board, management committee, vetoes, special voting classes, tag-along/drag-along
• Transfer restrictions: must be in statuts; pre-emption rights common
• Highly preferred for PE/VC structures, startup equity, and complex JVs
• Shareholders' agreement (pacte d'actionnaires) supplements statuts for confidential arrangements

SARL (Société à Responsabilité Limitée)

• Minimum share capital: EUR 1
• Shareholders: 1–100
• Management: gérant(s) — appointed by shareholders
• Less flexible than SAS but simpler
• "Parts sociales" (quotas) rather than shares; transfer requires approval by majority of shareholders (in most cases)
• Common for SMEs and wholly-owned subsidiaries

SA (Société Anonyme)

Two management models:

1. PDG model (conseil d'administration + PDG): unitary board with chairman-CEO (Président-Directeur Général)
2. Directoire / Conseil de surveillance: supervisory board (conseil de surveillance) + management board (directoire); two-tier structure

• Minimum share capital: EUR 37,000
• Required for listed companies (no listed SARL)
• More burdensome governance requirements than SAS

SASU (Société par Actions Simplifiée Unipersonnelle)

Single-shareholder SAS — very common for 100%-owned subsidiaries. Simpler governance; sole shareholder makes all decisions directly.

Governance features — SAS focus

The SAS allows bespoke governance. Frequently seen provisions:

Directors' duties

SAS Président

• General duty of care: act as a bon père de famille (prudent manager)
• Duty of loyalty: no conflict of interest without disclosure
• Faute de gestion (management fault): personal liability for mismanagement causing loss to the company — applicable where the Président has committed a faute séparable (sufficiently serious misconduct separate from normal management errors)
• Action ut singuli: minority shareholders can bring derivative action for management fault

SA Directeurs généraux / PDG

• Similar duties; codified in Code de commerce
• Directors personally liable for: violations of law, articles of association, or management faults

Shareholder agreements (pacte d'actionnaires)

Under French law, shareholder agreements are contractual documents separate from (and generally confidential, unlike) the statuts. They commonly contain:

• Share transfer restrictions (pre-emption, approval rights)
• Tag-along / drag-along
• Non-compete and non-solicitation obligations
• Governance arrangements (information rights, board composition)
• Exit mechanisms (put options, call options, IPO obligations)
• Deadlock resolution

Enforceability: French courts generally enforce shareholder agreements against parties. Breach gives rise to damages. However, a transfer of shares made in breach of a shareholder agreement pre-emption right will be declared void only if certain formalities were followed.

M&A under French law

Acquisition of a SAS or SARL

• Share sale: cession de parts sociales (SARL) or cession d'actions (SAS); registration tax of 3% (SARL) or 0.1% (SAS) of sale price
• Tax optimization: holding company acquisition vehicle (Société holding) common; Luxembourg holding frequently used for MENA-France transactions
• Employee information obligation: for companies with 50+ employees, representative bodies must be informed before signing; information rights only (not approval)

Acquisition of an SA

• Public company: AMF rules apply; mandatory offer threshold (30% of voting rights triggers mandatory offer at highest price paid)
• Private SA: similar to SAS share acquisition

Due diligence

• Key due diligence areas: corporate secretary documents, shareholders agreements, social (employment) records, environmental, IP, tax, contracts
• Data room typically hosted on Datasite or similar

Employment law in M&A

French employment law is highly protective. In an acquisition:

• Business transfer (article L. 1224-1): employment contracts transfer automatically with the business
• Comité social et économique (CSE) information and consultation rights: mandatory before M&A affecting employees
• Mass redundancy procedures: mandatory for post-acquisition restructuring

French–MENA connection

Lebanon

Lebanese commercial law (Code de Commerce 1942) is directly derived from French law. Concepts such as SAL (= SA), SARL (= SARL), gérant, pacte de préférence, and the overall framework of corporate liability all originate from French law. French doctrine (doctrinal commentary) is frequently cited in Lebanese courts.

Egypt

Egypt's civil code was drafted under the influence of Abd al-Razzaq al-Sanhuri, who modeled it partly on French civil law. Corporate structures in Egypt also show French influence.

OHADA

The OHADA Uniform Act on Commercial Companies (AUSCGIE) governs 17 francophone African countries. It is also derived from French law and uses similar entity types (SA, SARL, SAS). Relevant for MENA investors with West/Central Africa exposure.

Annual obligations

• Annual shareholders' meeting: SA within 6 months of year-end; SAS per statuts
• Annual accounts: filed at Greffe du Tribunal de Commerce (public)
• Audit required: SA (always); SAS (above certain size thresholds)
• Tax filings: corporate income tax (impôt sur les sociétés); TVA; withholding taxes on dividends

How to use this pack

Load this pack when the user:

• Is advising on a French corporate structure for a MENA holding company
• Needs to understand SAS design for a JV or PE structure
• Is advising on M&A of a French target
• Needs to understand French law to interpret a Lebanese or Egyptian corporate structure
• Has questions about directors' duties or shareholder agreement enforcement under French law

Caveats & currency

Loi PACTE (2019) introduced significant changes. Company formation procedures have been progressively simplified. Verify current registration fees and threshold requirements. EU-level corporate law directives continue to influence French corporate law.

Related skills

• [[kb-corporate-law-lb]] — Lebanese corporate law (French-derived)
• [[kb-corporate-law-eg]] — Egyptian corporate law (French-influenced)
• [[kb-corporate-law-de]] — German corporate law for comparison
• [[kb-corporate-law-uk]] — UK corporate law for common-law comparison