Buying / Selling a Company

Buying/Selling A Company in France - French Business Law

To find initial information on French companies, it is possible to consult (free of charge) a French web site (no accents) and, by entering the company name under ‘Entreprise’ as well as the first two figures of the five digit postal code under ‘Département’, you will be able to see the date of formation, the names of the officers, the last accounts filed etc.

Please note however, that the site is only in French and is often slightly out of date and the information obtained should not be considered to be definitive in any circumstances. A formal check with the Registre du Commerce et des Sociétés (French Companies Registrar) should be always carried out if it is necessary to rely on the data.

1. Buying a French company

It is of primary importance to decide right at the beginning whether you wish to purchase the shares of a French company (in French ‘actions’ for an SA/SAS or ‘parts’ for an SARL) or alternatively whether you wish simply to acquire the business and goodwill (in French ‘fonds de commerce’).

In the event that you were to purchase the shares, then not only would you acquire all the assets of the company, but also all its liabilities (and after the event you cannot claim, at least vis-à-vis third parties and creditors, that you were not aware of them).

Even if you proceeded to purchase solely the business and good will, then care would need to be taken in regard to the employees who have a statutory right to follow the activity of the entity.

It should also be mentioned that French businesses often do not hold real property in their own names but instead the property is usually held in a special type company, a société civile immobilière, which then leases the buildings and land back to the operational entity.

2. Selling a French company

If you intend to sell a French company, then care should taken in respect of the warranties and guarantees which you will be asked to give, and it is more than probable that such commitments would be subject to French statute and case law.

It is also strongly suggested that personal guarantees, pertaining to the sale of the French entity, should not be given.

All and any information may not be held to be binding and specific advice should be sought from a duly qualified and trained French lawyer