The public limited company (SA)

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1. How to set up a public limited company (SA)?

The constitution of a SA requires several criteria:

First of all, it must be formed by two shareholders (Ordinance No. 2015-1127 of 10 September 2015) or seven when the SA is listed.

It must have a minimum capital of 37,000 euros (article L.224-2 paragraph 1 of the Commercial Code). In some cases, there may be a question of derogation from this minimum for companies with particular activities.

Contributions in industry are prohibited, only contributions in cash and in kind are accepted (in the case of the latter, a contribution auditor must be appointed).

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The steps for setting up a SA are 6 in number:

First, studies and research concerning the corporate name must be carried out at the National Institute of Industrial Property (INPI), then choose the corporate purpose, the registered office, the capital and the form of the titles with the registry of the commercial court.

In a second step, a draft statute must be prepared.

Thirdly, you need the agreement of the shareholders as well as the number of shares to which they will subscribe and the terms of release of capital.

Fourth, the amounts committed must be deposited.

Fifthly, the statutes must be signed and the management bodies appointed. For example, appointing the auditor and his deputy.

Finally, it is a question of completing the formalities relating to advertising and declaring beneficial owners.

Deepen the subject with 5 key steps to incorporate a company.

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2. What are the advantages of an SA?

The advantages of an SA are numerous. Indeed, the responsibility of shareholders is limited to contributions, credibility with partners is more important, it is a structure that can evolve to adapt and finally the transmission of shares is facilitated.

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3. What is the tax regime for public limited companies?

The SA is subject to corporate tax. The taxable profit is calculated after deduction of the remuneration of the manager.

• Reduced rate of 15% up to 38,120 euros in profits.
• Intermediate rate of 28% between 38,120 and 500,000 euros in profits.
• Normal rate of 33.33% for profits in excess of 500,000 euros.

The abovementioned reduced rate concerns companies with an annual turnover of less than 7.63 million euros, with fully paid up capital and owned by natural persons at least 75%.

A public limited company can also opt for income tax. For this, and in accordance with the law for the modernization of the economy of August 4, 2008, it must meet several conditions:

• It should not be listed on a stock exchange;
• Have less than 5 years of existence at the date of the tax option;
• Employ fewer than 50 employees;
• Achieve an annual turnover of less than 10 million euros;
• Have a share capital held by natural persons up to a minimum of 50%;
• Have a share capital held at least 34% by one or more persons acting as managing director, president, director or member of the management board or board of directors;
• To carry out a commercial, industrial, craft, professional or service activity;
• In order to apply this option, the agreement of all partners must be obtained.

Good to know: The sale of shares in an SA does not require the unanimous consent of shareholders. There is a tax rate payable by the transferee of 0.1% of the sale price.

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4. What is the social regime of a public limited company (SA)?

Directors can combine a social mandate and an employment contract but this accumulation cannot exceed 1/3 of the total number of directors in office.

As for the managing director, he benefits from the social security and pension system for employees but he is excluded from the unemployment insurance system since he is under the “assimilated employees” regime. The percentage of compulsory social security contributions is 60% of remuneration.

This remuneration is then integrated into the income tax base of his tax household, in the category of salaries and wages.

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5. What is the management method and the supervisory body of the SA?

There are two management methods in SA:

• A monocephalic management with a board of directors or;
• A two-headed management team with a management board and a supervisory board.

The objective of the supervisory body (board of directors or the dual body of the management board and the supervisory board) is to represent the shareholders' meeting. He must define the overall strategy with them. Following this, it controls the actions carried out by the executive branch and their implementation in consideration of the pre-established strategy.

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6. What is the participation in results/contribution to losses applicable in the SA?

Participation in results is defined in the statutes. This is not necessarily proportional to the contributions made.

Finally, each shareholder's contribution to losses cannot exceed their share in the share capital.

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