Warranty of Liabilities (“Garantie de Passif”) in French SARL Share Transfers
1. The Purpose and Nature of the Warranty of Liabilities When the shares of a French Société à responsabilité limitée (SARL) are transferred, the purchaser may later discover that the company’s financial situation is not as presented at the time of sale. Legal remedies for such discrepancies are limited under French law. To manage this […]
Legal Consequences of a SARL Share Transfer in France: Dividends, Current Accounts, Warranties, and Post-Transfer Obligations
Introduction In a French Société à responsabilité limitée (SARL), the legal effects of a share transfer depend on the date the transfer becomes opposable to the company and, where relevant, to third parties. From that date, the transferee exercises shareholder rights (voting, information, participation in distributions) and assumes obligations attached to the ownership of the […]
Share Transfer Deed in French SARL – Drafting, Price, Spousal Consent, Formalities
Introduction The transfer of shares (« parts sociales ») in a French limited liability company (SARL) is a transaction of crucial significance. One of the most critical stages is the drafting and execution of the transfer deed. This article examines the legal architecture of the deed of transfer in a French SARL. It addresses first the promise […]
Transfer of Shares and Approval Procedures in a French SARL: Legal Framework, Process, and Practical Implications
1. Introduction The Société à responsabilité limitée (SARL) is a private, closely held form of company in French law. Its structure is deliberately designed to restrict the entry of new partners and preserve the personal nature of relationships among existing associates.One of the most important consequences of this “closed” character is that share transfers to […]
Capital Reduction in a French SARL: Legal Framework, Procedures, and Tax Implications
Overview Capital reduction is a significant corporate operation under French law, often undertaken in response to financial losses, strategic restructuring, or compliance requirements. In the context of a Société à responsabilité limitée (SARL), it entails a formal procedure governed primarily by Articles L.223-34 et seq. of the French Commercial Code. The reduction can be motivated […]
Capital Increase by Incorporation of Reserves or Retained Earnings in a French SARL
Overview A Société à responsabilité limitée (SARL) may decide to strengthen its equity by transforming all or part of its reserves or undistributed profits into share capital.This operation, known as a capital increase by incorporation of reserves or retained earnings, does not involve new contributions from shareholders. Instead, it formalizes internal capitalization of amounts that […]
Capital Increases by Contributions in Kind in French SARLs
Overview In a Société à responsabilité limitée (SARL), increasing the share capital through non-cash contributions (apports en nature) allows shareholders or new investors to strengthen the company’s equity without bringing in additional cash.This mechanism is common when a business owner wishes to transfer assets—such as real estate, machinery, client portfolios, patents, or shares in another […]
Cash Capital Increases in a French SARL: How to Execute Them Correctly
Increasing share capital in cash (augmentation de capital en numéraire) is a high-stakes operation for a French SARL. Executed correctly, it strengthens equity, clarifies governance, and reassures creditors. Executed poorly, it invites nullity actions, manager liability, and shareholder disputes. This guide sets out, in clear terms, the two lawful execution paths, the content of the […]
Increasing Share Capital in a French SARL: Legal Framework, Shareholder Rights, and Compliance in Practice
A Comprehensive Guide for Entrepreneurs and Corporate Counsel During the lifespan of a French Société à responsabilité limitée (SARL), several circumstances may necessitate an increase in the share capital initially fixed by the articles of association. The causes are diverse: a company’s growth and need for financing, the arrival of new partners, or the decision […]
How to Restore Equity: Capital Increases, Debt Waivers, and Capital Reductions in French SARLs
Continuing After a Loss of Half the Share Capital — The Second Phase of Regularisation After deciding to continue operations despite equity (capitaux propres) falling below half of the share capital, a SARL must not only reconstitute its equity within two financial years (as explained previously) but also ensure that this reconstitution is effective and […]
