The existence of a company normally implies:
- the agreement of the shareholders;
- the legal capacity of the shareholders, who may be either individuals or legal entities;
- an attainable and lawful social purpose, to be defined explicitly in the articles of association;
- several shareholders, except for EURLs and SASUs, where there may be a single shareholder. The minimum number of shareholders depends on the company's form. There is generally no limitation as to the maximum number of shareholders, except for SARLs where the number of shareholders is limited to 100;
- effective contributions made by the shareholders, to be compensated by shares. The contributions may take the form of: cash, assets (in-kind contributions) or, in some rare cases, industry. In principle, industry may not be compensated by shares, except in SARLs and SASs;
- the participation of the shareholders to the company's profits and losses. However, this does not need to be proportional to their respective capital contributions. In any case, shareholders should not be totally deprived of their rights to a share of the profits nor totally exempt from any contribution to the losses. Profits are generally allocated to the shareholders in proportion of their capital contributions, unless the articles of association provide otherwise; and
- the existence of an affectio societatis. This condition is not required for EURLs and SASUs, which have a single shareholder, nor, in practice, for companies with a large number of shareholders.
The articles of association may be more or less detailed. It is generally preferable to draft simplified articles of association, which merely refer to the provisions of French company law, rather than to include such provisions in the articles of association. In the latter case, the articles would need to be modified by an extraordinary meeting of shareholders whenever legislative changes occur.
Under article L. 210-2 of the French commercial code, the articles of association must in all cases, regardless of the company's legal form, include at least the following information:
- the legal form of the company;
- the duration of the company, which cannot exceed 99 years and starts at the registration of the company at the business register;
- the name of the company, which may be freely determined provided that it does not infringe upon the rights of third parties. The name must be stated in all of the subsequent deeds or documents sent to third parties, immediately preceded or followed by an indication of the legal form and of the amount of the share capital;
- the registered office;
- the social purpose; and
- the amount of the share capital.
The articles of association should be set out in written form. They need to be drawn up before a public notary only in specific circumstances (e.g. for contributions of real estate assets, or for real estate leases exceeding 12 years).
Following the signature of the articles of association, the following publicity formalities should be complied with:
- registration with the administration, and payment of the resulting duties;
- notice of the formation in a legal gazette;
- filing of documents with the Commercial Court (in particular, a copy of the articles of association); and
- registration at the business register of the Commercial Court, which confers on the company its legal personality, followed by a publication in a special bulletin ("Bulletin officiel des annonces civiles et commerciales" or BODACC) made by the clerk of the Commercial Court.
In respect of SAs, which resort to public offerings, the formalities required are more complex. A special notice should, in particular, be published, together with a prospectus available to the public which is subject to the approval of the French Securities and Exchange Board ("Autorité des Marchés Financiers" or AMF).