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Questions and Answers
What distinguishes an LLC from a public company, according to the information provided?
What distinguishes an LLC from a public company, according to the information provided?
- LLCs can conduct an initial public offering (IPO) under specific conditions.
- LLCs can issue bonds to the public without making a public offer. (correct)
- LLCs always require a minimum capital to be established.
- LLCs are required to have a minimum of three partners.
Under what condition does a Limited Liability Company (LLC) automatically become a Single-Member Limited Liability Company (EURL)?
Under what condition does a Limited Liability Company (LLC) automatically become a Single-Member Limited Liability Company (EURL)?
- When all shares are gathered in the hands of a single partner. (correct)
- When the company decides to change its legal status through a formal process.
- When the company's revenue falls below a certain threshold.
- When the company fails to meet certain compliance standards.
What is a key characteristic of the Private Limited Company (Ltd) structure?
What is a key characteristic of the Private Limited Company (Ltd) structure?
- It is prohibited from trading shares on the stock market. (correct)
- It must always have a board of directors.
- It is required to disclose financial information to the public.
- It requires a minimum of 50 shareholders.
What is the role of the 'Approval clause (clause d'agrément)' in a Private Limited Company (SAS)?
What is the role of the 'Approval clause (clause d'agrément)' in a Private Limited Company (SAS)?
If contributions in kind to an LLC exceed €30,000 or represent more than 50% of the share capital, what measure is typically required?
If contributions in kind to an LLC exceed €30,000 or represent more than 50% of the share capital, what measure is typically required?
How are majorities and quorum determined in a Private Limited Company (SAS)?
How are majorities and quorum determined in a Private Limited Company (SAS)?
What is the primary purpose of the 'Inalienability clause (clause d'inaliénabilité)' in a Private Limited Company (SAS)?
What is the primary purpose of the 'Inalienability clause (clause d'inaliénabilité)' in a Private Limited Company (SAS)?
What legal requirement applies to the manager of a Limited Liability Company (LLC)?
What legal requirement applies to the manager of a Limited Liability Company (LLC)?
In the context of an LLC, what does 'intuitu personae' refer to?
In the context of an LLC, what does 'intuitu personae' refer to?
What is the implication if 5% of partners in an LLC propose a resolution for the agenda of the General Meeting?
What is the implication if 5% of partners in an LLC propose a resolution for the agenda of the General Meeting?
Under what circumstances is a Limited Liability Company (SARL, SAS) required to designate an auditor?
Under what circumstances is a Limited Liability Company (SARL, SAS) required to designate an auditor?
In a Single-Member Limited Liability Company (EURL), which tax regime typically applies if the sole partner is a natural person?
In a Single-Member Limited Liability Company (EURL), which tax regime typically applies if the sole partner is a natural person?
What condition typically allows a non-emancipated minor to be a member of an LLC?
What condition typically allows a non-emancipated minor to be a member of an LLC?
What happens to the remaining unpaid portion of contributions in cash for an LLC after the initial 1/5 is released upon creation?
What happens to the remaining unpaid portion of contributions in cash for an LLC after the initial 1/5 is released upon creation?
In an LLC created after August 4, 2005, what constitutes a blocking minority regarding special decisions?
In an LLC created after August 4, 2005, what constitutes a blocking minority regarding special decisions?
If a partner in a limited liability company wants to sell his shares and other partners refuse to consent, what action are they obligated to take within 3 months?
If a partner in a limited liability company wants to sell his shares and other partners refuse to consent, what action are they obligated to take within 3 months?
In the context of a Limited Company (Ltd) structure, what is the status of a chartered manager who is also a majority shareholder?
In the context of a Limited Company (Ltd) structure, what is the status of a chartered manager who is also a majority shareholder?
What is the 'Exclusion clause (clause d'exclusion)' in the context of a Private Limited Company (SAS)?
What is the 'Exclusion clause (clause d'exclusion)' in the context of a Private Limited Company (SAS)?
A SAS has operated for two years. In the first year, it had 45 employees, a turnover of €9 million, and a balance sheet total of €4.5 million. In the second year, it had 52 employees, a turnover of €11 million, and a balance sheet total of €5.5 million. Is the SAS required to appoint an auditor?
A SAS has operated for two years. In the first year, it had 45 employees, a turnover of €9 million, and a balance sheet total of €4.5 million. In the second year, it had 52 employees, a turnover of €11 million, and a balance sheet total of €5.5 million. Is the SAS required to appoint an auditor?
You're advising a client on structuring their new business venture in France. They want a flexible structure where they can easily tailor the governance rules and shareholder rights through the company's charter. They also want the option to later access public markets for capital raising if needed. Which entity type would be MOST suitable for them?
You're advising a client on structuring their new business venture in France. They want a flexible structure where they can easily tailor the governance rules and shareholder rights through the company's charter. They also want the option to later access public markets for capital raising if needed. Which entity type would be MOST suitable for them?
Flashcards
LLC (Limited Liability Company)
LLC (Limited Liability Company)
An association of persons and capitals, it cannot go public but can issue bonds since 2014.
LLC Number of Partners
LLC Number of Partners
Minimum of 2, Maximum of 100. Becomes EURL if there is one.
LLC: Contributions in cash
LLC: Contributions in cash
Must be released by 1/5 when created; the remainder within 5 years from incorporation.
LLC Manager
LLC Manager
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5% of partners
5% of partners
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LLC Majority Rules
LLC Majority Rules
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EURL
EURL
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Private Limited Company (Ltd/SAS)
Private Limited Company (Ltd/SAS)
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Ltd Number of shareholders
Ltd Number of shareholders
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Ltd Business Structure
Ltd Business Structure
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Auditor Designation Thresholds
Auditor Designation Thresholds
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Exclusion clause
Exclusion clause
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Inalienability clause
Inalienability clause
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Approval clause
Approval clause
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Study Notes
- Limited liability undertakings include LLC (SARL) and Limited Company (SAS).
- France's most adopted incorporated form follows that SAS is greater than SARL
Limited Liability Company (LLC/LLP)
- The Limited Liability Company is a commercial entity formed via of people and capitals .
- An LLC has intuitu personae, yet with limited liability.
- LLCs cannot go public, yet can issue bonds since 2014.
- The number of partners for an LLC is from 2 to 100; if there is one partner, it becomes an EURL.
- Partners lack commercial capacity; a non-emancipated minor or an unable adult can be a member if subscriptions of participations are done by a legal representative.
- No minimum capital is required.
- Contributions in cash must be released by 1/5 when created with the balance within 5 years from incorporation.
- Contributions in kind must be valuated by a special auditor if their value goes over €30,000 or represents over 50% of the share capital.
- Partners can refuse any valuation, after which they are held jointly liable for 5 years.
- The manager of an LLC must be a natural person appointed by partners.
- 5% of partners can place a project of resolution on the agenda of the General Meeting.
Majorities and Quorum for Ordinary Decisions
- Majority: on the 1st meeting, majority of shares is required; on the 2nd meeting, a majority of attendees/representatives are required.
Majorities and Quorum for Special Decisions (for LLCs created after August 4, 2005)
- Quorum: on the 1st meeting, 1/2 of shares are required; on the 2nd meeting, 1/5 of shares are required.
- Majority: 2/3 of shares is required, equalling a blocking minority of at least 34%.
- To sell shares, a partner must submit their project to the other partners, who have 3 months to respond.
- A chartered manager can be an employee if they are not a majority partner.
Single-Member Limited Liability Company (EURL)
- An EURL is an LLC with a sole partner that can be created from the beginning or by consolidating all shares into one hand.
- There are no special formalities when changing from SARL to EURL or vice versa.
- The sole partner can be a natural or legal person and can manage or appoint a third party.
- Majority and quorum rules do not apply; all decisions are made by the sole partner.
Tax Regime Differences Between SARL and EURL
- SARL usually uses coporate tax, unless income tax is selected.
- EURL: if the sole partner is a natural person, income tax is used unless coporate tax is selected. If the sole partner is a legal person, coporate tax is used.
Private Limited Company (Ltd/SAS)
- A Limited Company (Ltd) is an association of capitals formed by shareholders.
- A Ltd , though is a joint-stock corporation, cannot make public offers/trade shares on the stock market.
- Minimum shareholder count is 2, with no maximum limit.
- If there is one shareholder, it becomes an SASU (single-member Ltd).
- No minimum share capital is needed.
- Shareholders can freely choose the company's rules; subject to limited legal provisions.
- A president represents and manages the entity, appointed by the charter's rules.
- General manager(s) or delegated general manager(s) can act as president if registered with the Registrar of companies.
- Majorities and quorum are defined in the company's charter.
Key Clauses in SAS Articles of Association
- Approval clause: Share assignment/cession needs approval from other shareholders.
- Inalienability clause: Prevents shareholders from transferring shares to others longer than 10 years.
- Exclusion clause: Allows shareholders to exclude another shareholder as a sanction.
Conditions to Designate an Auditor
- Business entities (SARL, SAS) must designate an auditor if 2 of the 3 thresholds are met in the last 2 years:
- 50 staff
- Turnover of 10 million euros
- Balance sheet of 5 million euros
- If the SAS is intuitu personae or intuitu pecuniae relies on thee shareholders' will in the articles of association.
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