All about the SARL
Despite the 870 SARLs struck off the commercial register during the first quarter of 2017, it remains the predominant status for family projects, particularly in construction, catering and other activities. Wondering which legal form best suits your business project?
Discover the SARL
Contents
1. What is a SARL?
2. What are the advantages of setting up a limited liability company?
3. SARL: formalities for setting up
4. Closing a SARL: dissolution/liquidation formalities
A Société à Responsabilité Limitée (limited liability company) is a form of commercial company whose main feature is to limit the liability of partners to the amount of their contributions.
It also features the following characteristics:
- All activities can be carried out by a SARL, with the exception of insurance, tobacconists, capitalization and savings, and certain regulated professions (chartered accountants, architects, pharmacists, etc.).
- It must have at least 2 associates, and a maximum of 100. These associates must make contributions (in cash or in kind) to form the share capital. In return, they receive shares. This does not include contributions in kind.
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No minimum share capital is required to set up a SARL. However, 20% of the contributions in kind must be paid up at the time of incorporation.
- A SARL must be managed by one or more managers, who are responsible for the day-to-day running of the company, including convening the annual general meeting. The partners, for their part, vote on decisions taken at the general meeting.
- For tax purposes, SARLs are subject to corporate income tax (IS).
Safe
The SARL's major advantage lies in the possibility of considerably limiting the liability of the partners. As a result, in the event of financial difficulties or bankruptcy, the professional assets of the SARL's manager and partners will be dissociated from their personal assets. The only condition that engages the manager's assets is mismanagement.
Easy to assemble
Not to mention the case of a sole proprietorship, the creation of a SARL is more accessible than that of a SAS or SA. The partners are free to set the amount of their share capital. This should be determined according to the company's size, business activity and capital requirements.
Easy to manage
The operation of a SARL is highly regulated by law, and many provisions cannot be deviated from in the Articles of Association. This is in contrast to what can happen in a SA or SAS. For example, the opening of capital, the transfer of shares, etc.
A SARL also makes it easy to control the manager's social security status. Depending on whether he or she is a majority or minority shareholder, he or she can be either a self-employed worker (with more than 50% of the shares), or a salaried employee (with less than 50% of the shares). The manager's spouse can even claim the status of collaborating spouse.
As far as taxation is concerned, an SARL may nevertheless be subject to income tax, under certain conditions (less than 5 years old, fewer than 50 employees, sales of less than €10 million, etc.).
Appointing a manager
First and foremost, the partners must choose the person or persons who will manage the SARL. The manager may be appointed in the articles of association, or by separate deed for greater flexibility. This person will be the company's legal representative.
Assessing in-kind contributions
In order to be paid up, contributions in kind must be valued by a contribution auditor. However, if the contribution is less than €30,000 or does not exceed half the share capital, a contribution auditor is not required.
Drafting and registering articles of association
The Articles of Association are a company's roadmap. They must include: identification of the SARL (company name, corporate purpose, duration, etc.), rules for management, organization and control of the company, allocation of profits, etc.
Once signed by all partners and certified by the company's representative, the articles of association must be registered with the Service des Impôts des Entreprises (SIE). A shareholders' agreement is also recommended for SARLs.
Open a business bank account
It is essential toopen a business bank account in which to deposit the SARL's funds. These funds will be blocked until the company is registered.
Publish a notice of incorporation in a JAL
The notice of incorporation can be regarded as the company's birth certificate. All important information must therefore be included.
Submit registration application to the CFE
To finalize the incorporation of the SARL, the legal representative must submit the complete file to the appropriate Centre de formalités des entreprises. This must include: form M0, articles of association, certificate of deposit of funds, certificate of publication in a JAL, etc.
Procedures for modifying an LLC
Naturally, a number of events can occur during the life of a company. The manager may leave, the registered office may be transferred, a new partner may be admitted, and so on. All of these events lead to a modification of the SARL. In other words, an amendment to the articles of association. There are also procedures to be followed in order to properly inform the authorities and third parties:
General meeting
The convening of an Extraordinary General Meeting is required for any modification to the articles of association. This is because, in most cases, a quorum and majority rules are required to reach a decision. At the end of the meeting, minutes must also be drawn up.
Updating the articles of association
Updating involves inserting new information about the SARL into the articles of association. The minutes of the meeting and the updated articles of association will then need to be registered with the SIE.
Publish a notice of modification in a JAL
Unlike a notice of incorporation, both the new and old characteristics of the LLC must be mentioned in the notice of change.
Submitting the amended formality file to the CFE
Each modification to be declared corresponds to a Cerfa form. This form must be accompanied by the other necessary supporting documents.
Whether it results from the company's articles of association (automatic), is decided by the partners (voluntary) or forced by a court decision (judicial), the cessation of a company's activity must follow certain formalities. These are known as SARL dissolution formalities. These formalities are identical to those for modification.
Liquidation is the final stage in closing the business. The same procedures apply, except that at the Annual General Meeting, the partners must decide on :
- discharge of the liquidator's mandate
- the final liquidation accounts
- discharge
- and the close of liquidation.
Written by our expert Editorial staff
October 27, 2017
