A company is a contract between two or more persons who agree to assign to a joint undertaking, property or industry, to share the profits or benefit from the savings that may arise.
The shareholders are willing to work together, of interest on an equal footing, in a joint venture (we speak of affectio societatis).
A company is subject to general rules of contracts relating to the validity and evidence. In addition, the company has legal personality: it has its own assets, representative bodies … Its operation is organized by law and the statutes.
There is no society without contributions. There are three distinct types:
- the cash contribution: contribution of money;
- the contribution in kind: the contribution of tangible property (eg a building, equipment …) or intangible (eg a business, a patent …);
- the contribution in industry: providing technical expertise, services, work of the partner provider.
Incorporation formalities must be completed: writing articles, registration in the trade and companies … The articles should be developed with care, as subject to certain legal rules binding, they constitute the “single act” of society and his associates. The notary is there to inform, advise and write the articles.
Forming a company can meet various objectives: Joining together to pursue an occupation or acquire property; Obtaining the financial assistance to providers of capital to make an investment; separating business assets and personnel; Transmitting a business or all or part of a heritage; Adapting the legal form to its development.
When it comes to invest in the French Real Estate Market, the company type designed to be the proper vehicle is the SCI: the real estate investing company form.
SETTING UP A FRENCH SCI
Basic conditions:
– the object : it must have an exclusively civilian;
– plurality of partners : it takes at least two partners but the law imposes no maximum. The shareholders are not deemed to be traders, then everyone is allowed to become an associate (major, minor, natural or legal persons, foreign …)
– contributions : each partner must make a contribution, this rule has no exception. It could be contributions in cash, in kind and / or in industry;
– share capital : the law imposes no minimum, except for civil societies offering their shares to the public (including Real Estate Investment Trusts). In principle, capital is fixed. The articles may nevertheless provide a variable capital;
– the shares must have the same nominal value. The law sets no minimum or maximum value.
Formal requirements:
The articles must be in writing. The company must be registered with the Commercial Registrar. After the completion of several formalities (registration of statutes, publication of legal notice in a legal gazette), the application for registration of the company with the companies Registrar. The company acquires legal personality from that registration.
RUNNING A FRENCH SCI
The partners have considerable freedom to determine the rules of organization and functioning of the SCI.
The manager of the company may be an associate or a third party, French or foreign. It may be mentioned in the articles or by a subsequent decision of shareholders representing more than half of the shares unless a contrary statutory provision. The manager is revocable by the same majority unless otherwise stipulated. His/her powers are determined by the statutes. With regard to the third parties, the company is bound by all acts within the corporate purpose.
The partners are indefinitely and jointly liable. The creditor must first act against the company and can only turn against any partner separately in case of failure (unsuccessful seizure). Each partner is liable only in proportion to its share capital
The transfer of shares it must be in writing. The approval of all partners is necessary in the absence of contrary statutory provisions. The shares they can be pledged as collateral.
Each shareholder has a right to vote in any General Assembly. The number of vote rights of each member is freely set by the articles (usually the number of vote rights is proportional to the number of shares owned by each shareholder). Decisions are, in the absence of specific statutory provisions, taken unanimously in a meeting or a written consultation (if the articles so provide) or in a document signed by all partners.
The shareholders have a right of withdrawal. Its exercise must be approved unanimously by the other partners (except special statutory provision), or by court for good cause. The partner is reimbursed for its social and human capital is reduced accordingly.
All partners are entitled to profits in the proportions and conditions set by the statutes.