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Reduce Capital in an EURL(French Sole Shareholder Limited Liability Company)
Lowering your company’s share capital can be part of a sound financial strategy — to align the company’s structure with its actual size, absorb losses, or refund excess capital to the sole shareholder. Our French corporate lawyers and paralegals handle every legal, accounting, and filing step required to reduce the capital of your EURL, ensuring full compliance with French commercial law.
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What is a Capital Reduction in an EURL?
A capital reduction in an EURL (“Entreprise Unipersonnelle à Responsabilité Limitée”) means decreasing the amount of the company’s share capital recorded in the articles of association.
This decision may be voluntary (to adapt to reduced activity or return funds to the shareholder) or motivated by losses (to clean up the balance sheet before recapitalization).
It’s a significant corporate operation that modifies the company’s equity and must be carefully prepared, justified, and registered with the Registre du commerce et des sociétés (RCS).
Advantages
Balance sheet optimization: clears past losses and restores accurate equity levels.
Strategic restructuring: allows reorganizing before adding new capital or bringing in partners.
Shareholder refund option: part of the excess capital can be legally returned to the sole shareholder.
Improved financial ratios: after revaluation, the company may appear leaner and more stable to banks and auditors.
Compliance and clarity: ensures that all company figures match accounting and legal records.
The capital reduction operation safeguards both the entrepreneur’s interests and the company’s credibility by aligning legal capital with actual resources.
How to Reduce the Capital of an EURL in France?
With FrenchCo.lawyer, your capital reduction process is secure, compliant, and efficiently handled from start to finish:
Preliminary Legal Review
We analyze your company’s situation — reasons for the reduction (losses, simplification, or repayment), financial health, and whether an auditor’s report is needed.
Preparation of Legal Documents
Our lawyers draft the sole shareholder’s decision, revised articles of association, and if applicable, the auditor’s report and declaration of compliance.
Protection of Creditors
French law requires a creditor opposition period (usually 30 days from publication). We manage the legal announcement and monitor the process until the deadline expires.
Filing with the Registry
After the opposition period, we compile the entire file (resolution, updated articles, legal notice proof, registry forms) and submit it to the Commercial Court Registry for validation.
Delivery of Updated Kbis
You receive the new Kbis extract showing the reduced share capital and certified updated statutes — proof that the procedure is officially registered.
Why Choose FrenchCo.lawyer?
Capital reduction involves strict procedural rules and timing, especially regarding creditor rights. At FrenchCo.lawyer, your file is managed by registered French lawyers supported by corporate paralegals, ensuring that each stage — legal drafting, publication, registry filing — is executed with precision and full compliance. We handle everything while you maintain full peace of mind and legal security for your EURL.
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What We Need From You to a Reduce the Capital of Your EURL ?
To complete the capital reduction of your EURL, we will require:
Company Identification
Recent Kbis extract (less than 3 months) and current articles of association.
Shareholder Information
Identity and proof of address of the sole associate, who makes the decision to reduce capital.
Reduction Details
New amount of capital, reason for reduction (absorption of losses or refund), and intended effective date.
Financial Documentation
Latest balance sheet, proof of available funds, and, if necessary, an auditor’s report or valuation supporting the reduction.
Registered Office Evidence
Proof of address of the company (lease, domiciliation contract, or ownership document).
And Then?
Once these documents are provided, our team manages every stage: preparing legal acts, handling publication and opposition deadlines, filing with the Registry, and delivering your updated Kbis extract showing the new capital amount.
Reduce Capital in an EURL – Simple Process, Clear Budget
Flat legal fee starting from €899 excl. taxes*
Additional mandatory costs: publication in the official legal gazette + Commercial Court filing fees
No hidden costs, no surprises.
Our promise:
No upselling or unnecessary “packages”
No reseller intermediaries
Only genuine legal work carried out by qualified professionals
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Why Choose Us?
We Deliver Secure, Lawyer-Led Capital Reduction Services
Swift and compliant process: From drafting the reduction resolution to Kbis update, we handle every stage quickly and by the book.
Legally sound execution: Each filing and declaration strictly complies with French corporate and tax law.
Strategic protection: Our legal drafting safeguards your shareholder interests, company liquidity, and creditor relations.
Lawyer-level assurance: All steps are managed by licensed French lawyers for accuracy, reliability, and peace of mind.
Let our team simplify your EURL’s capital reduction — efficiently, safely, and fully compliant.
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Understanding the Reduction of Capital in a French EURL
When can an EURL reduce its share capital?
An EURL (Entreprise Unipersonnelle à Responsabilité Limitée) may reduce its capital at any time during its existence, provided the decision is justified and follows the legal procedure.
There are two main scenarios:
- Reduction motivated by losses
When accumulated losses exceed half of the share capital (C. com. art. L. 223-42), the sole shareholder must decide whether to dissolve or maintain the company. In this case, a capital reduction is often used to absorb the losses and restore the company’s balance sheet. - Voluntary reduction not motivated by losses
The shareholder may also choose to reduce capital for strategic reasons — for instance, to optimize the company’s structure, simplify accounting, or refund part of the initial investment if the company has surplus funds.
Each case requires a formal decision by the sole shareholder, modification of the articles of association, and registration of the change at the Commercial Court Registry.
Why would a company want to reduce its capital?
Reducing share capital is not a sign of weakness; it can be a strategic operation serving different objectives:
- Financial restructuring: to absorb losses and present a healthier equity situation.
- Simplification: to align statutory capital with real economic activity.
- Cash return: to legally refund part of the capital to the sole shareholder.
- Preparation for future changes: before a capital increase or transformation of the company (e.g., into a SARL or SAS).
- Tax optimization: in certain cases, to rebalance debt-equity ratios or prepare for new financing.
A capital reduction must always have a legitimate corporate purpose and comply with publication and filing formalities.
What are the legal methods of capital reduction in an EURL?
There are two principal legal techniques under French corporate law:
- Reduction of the nominal value of shares
The number of shares remains the same, but their face value is decreased (for example, from €100 to €50). This method is often used to offset accounting losses. - Reduction in the number of shares
Some shares are cancelled, reducing total capital. This is typically the method chosen when refunding part of the shareholder’s contribution.
Both methods must be reflected in an amendment to the company’s bylaws and registered with the Registre du commerce et des sociétés (RCS) after the creditor opposition period expires.
What is the creditor opposition period and why does it matter?
When a company decides to reduce its capital, creditors have the right to oppose the operation (C. com. art. L. 223-34).
- The opposition period lasts 30 days from the publication of the reduction decision in an authorized legal gazette.
- If creditors believe the reduction endangers their ability to recover debts, they may ask the Commercial Court to block or condition the operation (for example, by requiring guarantees).
- If no opposition is filed within 30 days, or if the court rejects the claim, the reduction becomes final and can be registered.
Ignoring this step can render the operation void or expose the company to liability claims.
Is an auditor’s report required for a capital reduction?
An auditor’s report (“commissaire aux comptes” or “commissaire à la réduction du capital”) may be required in specific cases:
- When the company already has a statutory auditor;
- When assets are returned to the shareholder as part of an in-kind repayment;
- When the reduction is part of a complex restructuring (e.g., simultaneous reduction and increase).
In practice, small EURLs without an appointed auditor and conducting a straightforward reduction (cash refund or loss absorption) often proceed without a report, provided all accounting justifications are attached.
What are the tax consequences of reducing capital in an EURL?
The tax treatment depends on the reason and form of the reduction:
- Reduction motivated by losses: purely accounting — no tax consequences, since no funds are returned to the shareholder.
- Reduction not motivated by losses: may trigger taxation if the shareholder receives repayment exceeding the initial paid-in capital.
- The refunded portion corresponding to capital contributions is tax-free.
- Any surplus is treated as a distributed dividend, taxed at the 30% “flat tax” (12.8% income tax + 17.2% social contributions) or under the progressive IR scale if elected.
- If the company is taxed under corporate tax (IS), these distributions are made after taxation at the company level.
How long does the capital reduction process take in France?
The procedure typically lasts 4 to 6 weeks, depending on administrative delays:
- Drafting and signature of the shareholder’s decision (Day 0)
- Publication in a legal gazette (within a few days)
- 30-day creditor opposition period
- Filing at the Commercial Court Registry after the opposition period
- Issuance of the updated Kbis extract showing the new capital
Complex cases involving auditors or court oppositions may extend this timeline.
Can the EURL’s capital be reduced to €1?
Legally, yes. There is no statutory minimum capital in French law (C. com. art. L. 223-2).
However, reducing capital to a symbolic amount may have negative effects:
- Loss of credibility with banks, suppliers, and partners.
- Increased risk of dissolution: if equity later falls below half of this small capital.
- Reduced borrowing capacity and potential personal guarantees required by lenders.
Therefore, lawyers generally recommend maintaining a realistic level of capital consistent with the business’s size and activity.
Can I both reduce and increase capital successively?
Yes — this is a common restructuring technique known as a “reduction followed by increase” (réduction-augmentation de capital).
It is often used when losses have accumulated:
- The company first reduces capital to absorb losses (cleaning the balance sheet).
- Then, a new contribution increases the capital to strengthen equity and ensure compliance with minimum thresholds.
This two-step process restores credibility and prepares the company for growth, new financing, or transformation into another legal form.
What documents are required for the capital reduction filing?
The Commercial Court Registry generally requires:
- Decision of the sole shareholder;
- Updated articles of association;
- Proof of publication in a legal gazette;
- Balance sheet or accountant’s certificate justifying the operation;
Registry forms (M2, M3, etc.); - Identity and address of the manager;
- Proof of payment of court fees.
Once the file is accepted, the updated Kbis extract is issued showing the new capital amount.
What happens after the capital reduction is completed?
Once registered:
- The company’s new capital amount appears on the Kbis extract.
- The amended bylaws are now enforceable against third parties.
- Accounting entries must reflect the operation precisely.
- If the reduction involved a refund, payment is made to the shareholder after registry confirmation.
The company continues its operations normally, with its new legal capital officially recognized.
Reduce the Capital of Your EURL
Let our French lawyers & paralegals
handle the full legal process for you.
More About Reducing Capital in an EURL
Why reduce the share capital of an EURL?
Reducing share capital can help align the company’s equity with its actual financial situation, offset losses, or optimize tax and financial structure. It must always comply with French corporate and accounting rules.
What are the types of capital reduction?
There are two main types: reduction motivated by losses (to regularize the balance sheet) and reduction not motivated by losses (to redistribute surplus or reorganize capital).
Do I need shareholder approval?
Yes. A formal decision from the sole shareholder is required, recorded in a legal document, and filed with the French Trade Registry.
What documents are required?
You will need the shareholder’s decision, updated bylaws, a certificate from the bank or auditor, and proof of filing with the registry. Our lawyers prepare and file all required acts.
How long does the process take?
On average, the process takes 2 to 4 weeks, depending on the complexity and the registry’s processing time.
Are creditors affected by the capital reduction?
Yes, they may oppose the decision within a legal timeframe. Our team ensures proper publication and compliance to avoid disputes.
Can I perform the procedure remotely?
Absolutely. All signatures, filings, and legal publications can be managed online by our French corporate lawyers.
What are the costs involved
Costs depend on the complexity of the operation, registry fees, and publication costs. We provide a fixed legal fee with full transparency.
