Dissolving a French company involves a formal legal process with several administrative steps. The exact procedure depends on the type of company (e.g. SARL, SAS, SA) and whether the dissolution is voluntary or forced (e.g. by court order). Below is an overview of the voluntary dissolution process, which is most relevant for business owners who choose to close their company.
Voluntary Dissolution of a French Company: Step-by-Step
1. Decision to Dissolve
A decision must be made by the company’s shareholders or sole partner (in the case of a single-member company). This is typically done via an extraordinary general meeting (“assemblée générale extraordinaire”).
- For an SARL, a majority of shareholders representing at least 75% of capital is usually required.
- For an SAS, the procedure depends on the company’s bylaws.
The resolution must formally state the decision to dissolve the company and appoint a liquidator (“liquidateur”) to manage the winding-up process.
2. Appointment of a Liquidator
The liquidator can be a legal representative, a third party, or even a shareholder. The liquidator is responsible for:
- Settling debts
- Recovering outstanding receivables
- Selling company assets
- Preparing accounts for the liquidation period
3. Filing the Dissolution with the Commercial Court
The decision and liquidator’s appointment must be filed with the Greffe du Tribunal de Commerce (Commercial Court Registry) within 1 month.
Documents required include:
- Minutes of the dissolution decision
- A form M2 (notice of modification)
- A declaration of non-conviction and a certificate of filiation of the liquidator
- Publication of a legal notice in a journal d’annonces légales (JAL)
4. Liquidation Phase
Once the company is in liquidation, it may only operate for the purposes of liquidation (no new commercial activity). The liquidator handles:
- Asset sales
- Payment of creditors
- Settlement of disputes
- Termination of contracts and leases
This phase may last several months to years, depending on the complexity of the company’s affairs.
5. Final Accounts and Closure
When the liquidation is complete, final accounts must be prepared and approved by the shareholders in a closing liquidation meeting (“assemblée de clôture”).
The liquidator then files:
- Form M4 (notice of closure)
- Approved liquidation accounts
- Minutes of the closure meeting
- Proof of publication in a JAL
These are submitted to the Commercial Court, which will then strike the company off the Registre du Commerce et des Sociétés (RCS) – the French trade and companies register.
What Are the Tax and Social Obligations During Liquidation?
During the liquidation, the company must continue to:
- File VAT returns (if applicable)
- Submit corporate tax declarations
- Notify URSSAF and other social contribution bodies of the cessation of activity
A final tax return is required at the end of the liquidation process. Depending on the company’s financial position, there may be capital gains or other tax implications to consider.
What Happens if the Company Has Debts?
If the company cannot pay its debts, the liquidator must declare cessation of payments (“déclaration de cessation des paiements”) to the Commercial Court within 45 days. This can lead to a judicial liquidation (“liquidation judiciaire”) or reorganisation proceedings, depending on the situation.
How Long Does It Take to Dissolve a French Company?
The voluntary dissolution and liquidation process typically takes 6 to 12 months, but this can vary. Complex cases, unresolved disputes, or asset sales may prolong the timeline.
Is Voluntary Dissolution Always the Best Option?
That depends. If the company has no significant debts, assets, or legal disputes, voluntary dissolution is straightforward. However, if the company is facing financial difficulties, restructuring or transferring business assets might be more beneficial.
What are the legal risks if a French company is not liquidated correctly?
If a company is abandoned without formal dissolution, the directors or shareholders may be held personally liable for outstanding debts or contractual obligations. Failure to comply with the formal liquidation procedure may also result in penalties from the French tax authorities or commercial court.
It is therefore essential to follow the process carefully and thoroughly – from the shareholders’ decision to deregistration with the RCS. If you need help with this, contact us.