Chapter 1 - Main Characteristics of Company Contract PDF

Topic 2 – Company law What are companies? → Have a legal person/ entity that can conclude contracts and has its own patrimony. Some companies are allowed to have only one shareholder → small enterprise Enterprise → way to talk about an activity, Ø legal term but economical. VS Comp...

Topic 2 – Company law What are companies? → Have a legal person/ entity that can conclude contracts and has its own patrimony. Some companies are allowed to have only one shareholder → small enterprise Enterprise → way to talk about an activity, Ø legal term but economical. VS Company is a legal structure used to run the enterprise. Some companies do not have legal entity → rare >Forms of company: SNC : société en nom collectif → general partnership SARL : société à responsabilité limitée → limited liability company SA : société anonyme → corporation SAS : société par actions simplifiée→ simplified shares company SC : société civile → civil company, SCI société civile immobilière used to organise a real estate patrimony Title 1: Main characteristics of companies (sociétés) in French law Chapter 1 - Main characteristics of company contract (contrat de société) ART 1832 c. civ: “ A company is created by two or more persons who agree by contract to assign property or their industry to a common purpose with a view to sharing the profit or benefiting from the economy that may result therefrom. It can be created in the cases provided for by the law, by the will of a single person The shareholders (associés) undertake to contribute to the losses.” Section 1 – The existence of two or several shareholders (associés) Shareholder or partner. ACTIONNAIRES - Under French Law, the general term used is “associé”. You can use this term whatever kind of company but when it issues specific shares called “actions”, you can also use the term “actionnaire”. PARTS SOCIALES - The shares that we have when a société is not issuing action: les parts sociales. When you have a SARL, you issue parts sociales VS when you have a société anonyme SA or société par actions simplifies SAS, you will be an actionnaire. EXCEPTIONS - So, ART 1832 c.civ, in pp, a company is created by two or more shareholders so MUST have at least 2 shareholders. BUT EXCEPTIONS ONLY if the law says so (ART 1832.2 c. civ), 2 main companies:  SARL can have one shareholder. In this case, we call this SARL an EURL (entreprise unipersonnelle à responsabilité limité) BUT still a SARL. SAS is also allowed to have one shareholder. In this case, we call this SAS a SASU (société par action simplifiée unipersonnelle).  You can be alone and create your own company. STATUS - When shareholder, most of the time you do not have any activity in the company but just vote in the general meetings, sells shares, has dividends, … The manager, CEO, will run the company. Shareholders do not run the company. BUT a manager can also be a shareholder of the company. DIFFERENCE - So daily, you do the exact same thing as an individual entrepreneur what is different is the legal structure you chose to organise your company. What changes is the legal structure. NUMBER - You can have thousands of shareholders if it is a listed company (société côtée). SOMETIMES, there is a maximum of shareholders (SARL: 100 max; SA: 2 at least, but if the company is a listed company, minimum 7 shareholders). Section 2 – The contribution (l’apport) §1 – Importance of the contribution According to article 1832, every shareholder must contribute and assign property to the company, give something or do something for the company. Contribution important because it is what will constitute the capital of the company. 3 kinds of contribution: Contribution in kind: bring to the company an asset (apport en nature) Cash contribution: bring to the company money (apport en numéraire) Contribution of services: (apport en industrie) Ø considered to calculate the amount of the K of the company. >On that depend what you will receive in exchange of your contribution: shares (or stock: all the shares of a company) that will be either parts sociales or actions. DIFFERENCES - You do not sell parts sociales in the same way you sell actions. The rules applied are different. It is not created the same way either. HOW MUCH - Important to consider what you bring to the company bcs you have shares in exchange. Those who bring more money will have more shares, more power, more actions or parts sociales, more voting rights. The more you bring to the company, the more parts of the company you will have. §2 – Different kinds of contribution 3 kinds of contributions. Most of the time it is cash contributions (apports en numéraire) :  Cash contribution: bring to the company money (apport en numéraire) Contribution in kind: bring to the company an asset (apport en nature) → computers, clientèle but most of the time included in a gg. Cc. You can bring tangible movables properties, intangible movables, universality de facto, contract, créances, … Contribution of services: (apport en industrie) Ø considered to calculate the amount of the K of the company → know-how (savoir-faire) if a registered know-how, it is a patent so contribution in kind. Section 3 – The sharing of profits and losses (la participation aux résultats) The sharing of profits: la participation aux bénéfices The sharing of losses: la contribution aux pertes When sharing a company, you want to earn money. Last Alinea of art 1832 c. civ → contribution to the losses. Sometimes, we do not make profit but losses. LIMITATION - If it is a limited liability company (SARL, SA, SAS), you will lose what you brought to the company. So, you are protected. You cannot lose more than what you brought to the company. EXCEPTIONS – SNC (société en nom collectif) → the liability of the shareholders is unlimited. The shareholders are liable for the debts of the company. Debt for 1 million so everyone is liable for 1 million. Section 4 – the will to act in the company (“l’affectio societatis”) Affectio societatis: willingness of shareholders to work together as equals for the success of the joint venture (entreprise). ART 1832.1 c. civ → states something similar to the definition of affectio societatis. But this characteristic is outdated: if there is only one shareholder, how can he work together with himself? DISTINCTION - This characteristic is used to distinguish the company contract from another contract for ex labour contract, employment contract → use of the affectio societatis. But the role of the affectio societatis is not very important.  If all the characteristics are fulfilled, it will be a company act, contract. Will lead most of the time to the creation of a new legal entity.