LLP is an alternative corporate business form that gives the benefits of limited liability of a company and the flexibility of a partnership. The LLP can continue its existence irrespective of changes in partners. It is capable of entering into contracts and holding property in its own name. The LLP is a separate legal entity, is liable to the full extent of its assets but liability of the partners is limited to their agreed contribution in the LLP. Further, no partner is liable on account of the independent or un-authorized actions of other partners, thus individual partners are shielded from joint liability created by another partner’s wrongful business decisions or misconduct. Mutual rights and duties of the partners within a LLP are governed by an agreement between the partners or between the partners and the LLP as the case may be. The LLP, however, is not relieved of the liability for its other obligations as a separate entity. Since LLP contains elements of both ‘a corporate structure’ as well as ‘a partnership firm structure’ LLP is called a hybrid between a company and a partnership.

Company Registration in France |

Overview of France Company Registration

Compared to other EU countries, France has a comparatively simple corporate formation process. France is the only nation in the EU that favors private sector investment over starting a firm from scratch. which makes it the favored place for investors and business owners to launch a venture. The French government provides a variety of perks and incentives to help the business succeed. The nation is a signatory to agreements like the TRIPS Agreement, which offers substantial protection for foreign intellectual property rights, when it comes to intellectual property protection.

Overview

The skilled labor force in France directly lowers the cost of manufacturing the goods. In addition, the nation provides adequate infrastructure and facilities for initiatives including energy, roadways, railways, ports, and other things. France is one of the friendliest countries for launching a business because to all these alluring benefits. Investors should therefore go through the French company registration process.

Advantages of French Company Registration

The investors who are considering registering a company in France may benefit from the following:
One of the greatest economies in the EU- With 65 million domestic consumers spending €2 trillion yearly, France has the second-largest consumer market in the EU. With over 83 million tourists visiting each year, the tourism sector is flourishing. France is ranked as the fourth-largest exporter of pharmaceutical items and the second-largest exporter of food and beverage products.
Protection of Intellectual Property- France is a signatory to agreements like the TRIPS Agreement, which provides strong protection for the rights of third parties to their intellectual property. The uniform patent registration procedure used by all French businesses gives patents in France increased security. International patent protection is offered through this. The World Economic Forum has placed France as the 12th best nation in the world for filing patents. The French government regularly investigates cases of intellectual property infringement, and the maximum fine per infraction is €7,500.
Low-Interest Loans for the Public Sector- French banks serving the public sector provide low-interest loans. This low-interest loan, in the amount of €1.5 million, would be used to finance innovation and R&D projects at businesses that I have fewer than 250 workers, (ii) generate less than €50 million in annual revenue, and (iii) have been in business for at least three years. Equity investment opportunities are permitted for resident unlisted enterprises. All domestic businesses in France have access to credit insurance at a reasonable price.
Government-sponsored Tax Advantages- The French government sponsors a number of tax incentives and related programs. Loans to international business owners may have interest rates as low as 2%. Companies would obtain a 7-year exemption from paying corporate tax if the investment was made in one of the French government's priority areas. Even though the corporation tax rate in France might reach 34%, investing in some areas can reduce the net effective tax rate to just 9%. The government also offers additional exemptions from social security.
Destination for FDI- France has overtaken the UK as the most desirable location for FDI, making it a good place to invest money from outside. In the year 2020, France will host close to a thousand FDI projects, with the majority of those investments going toward software and IT initiatives.
Good Infrastructure- The nation provides adequate infrastructure in the form of energy, roads, rail projects, ports, and other initiatives.

Regulatory Body/Agency for French Company Registration

The Registry of Commerce and Companies is France's main regulatory body for company registration (RCS).

Business Structures That Qualify for French Company Registration

An applicant registering a company in France would need to select an appropriate business structure. The following are examples of French business structures that entrepreneurs can use:
Société à responsabilité limitée (SARL), a French LLC
This type of entity is also referred to as a SARL, which is the French term for a private limited company. Due to its benefits for small business owners, such as its minimal capital needs and straightforward incorporation processes, this type of business vehicle is frequently used by entrepreneurs running small and medium-sized firms.
There must be one shareholder, one director, and a minimum share capital of €1 for this form of company. The director must not be a corporate body. The shareholders may agree on the minimal amount. An LLC can be formed in a short period of time. The residence requirements for an LLC's stockholders and directors are unrestricted. Their shares may be listed on the stock exchange, but they do not have access to the financial markets.
There may be no more than 100 shareholders, and there may only be one class of stock issued. The shareholders are not personally liable. The manager has extensive authority to represent the business before outside parties. The meeting resolutions are composed of the company's bylaws and shareholder meeting resolutions. The approval of the accounts must be done at the annual shareholders meeting each year.
Partnership
A partnership is an arrangement whereby the partners split the company's profits. The assets and liabilities of the business are divided among the participants in a partnership. In France, a variety of partnership arrangements, including general partnerships (SNCs), limited liability partnerships (SCSs), civil companies, civil real estate companies (SCIs), economic interest groups (GEIs), SCAs, and more, can be established.
Société par actions simplifiée (SAS)
This type of corporation is appropriate for establishing holding companies and start-up businesses due to the tremendous freedom it provides to the shareholders in customizing the firm to their needs. These companies' managers may be either natural or legal persons.
Shareholders are free to choose the rights that come with their shares. When a few requirements are met, an auditor must be appointed. It is unable to conduct public offerings, hence its shares are not eligible for stock exchange listing. There is no set management structure for SAS other than the appointment of a company president who has the most authority within the organization and uses that power to the fullest extent possible when speaking on behalf of the company to outside parties. BOD can be created through bylaws, however it is not required to do so.
The French LLC and this Company are comparable. One shareholder and one director are required for this sort of corporation, and one euro is the minimum amount of capital needed. The maximum number of stockholders for SAS has no upper bound. Directors can be chosen by companies to run this type of business. Within six months of the end of the previous fiscal year, they must hold an annual shareholder meeting for the approval of their accounts. Decisions about management must be made in France.
French Public Limited Company (Société anonyme or SA)
This sort of business entity is often designed for huge corporations since it enables the company to publicly issue shares to the market, which is necessary for large corporations as they need a lot of funding. It is not advised for first-time incorporation in France due to its complicated methodology.
For a creation similar to a public limited company, a French public limited company would need a minimum share capital. €37,000 is needed to establish a French Public Limited Company. There must be a minimum of two shareholders (and seven if the company is publicly traded), and there is no upper limit on the total number of owners. A SARL's management structure consists of one of the following:
An Executive Board with a maximum of 5 members and a Supervisory Board with a membership range of 3 to 18 members.
A Board of Directors with 3-18 members
When the SA's share capital is less than €150,000, one individual has been given permission to operate in place of the directorate. However, this business must adhere to the capital criteria. The management of the audits must be entrusted to an auditor. The member is not personally liable for the debts or liabilities of the firm. Bylaws, resolutions from shareholders' meetings, a share transfer register, shareholders' accounts, and other papers are typically included in a charter.
European Stock Corporation
The European Stock Corporation can be created by combining two or more EU enterprises. However, establishing this type of organization requires a minimum of €120,000.
Branch Office
A branch office (succursale) is an ongoing location that is not a distinct legal entity from its parent organization. These offices are established during a company's startup period. Foreign shareholders own the lion's share of the branch office's control. All branch office debts must be paid by the main firm. A minimum amount of paid-up capital is not necessary to establish a branch office.
Representative office
It is also known as a bureau de représentation, is a branch office of a foreign parent firm with plans to operate in France. It does not exist independently of its parent firm. Without having a trade goal, the representative office's aim is to watch the local French market for business prospects and carry out market research, marketing, and promotion operations. Contracting and trading on behalf of the parent firm are not permitted by the representative office. It serves only as a point of contact for potential customers and business partners to learn more about the overseas parent firm by contacting this office. The first step in establishing a subsidiary or branch office in France is the establishment of a representative office.
Given that it is a subsidiary of the parent firm, the representative office's operations are entirely responsible for the parent company. The Companies Formalities Center of the location where the company will be located, not the RCS, is where a representative office in France must register. A tax identification number is given to it, enabling the opening of a bank account. To represent the representative office's activities in France, the representative office must designate a representative who is a French resident. A certificate of incorporation, the parent company's articles of association, a board resolution to establish a representative office in France, a passport, and any other identification documents for the person registering the office in France are among the paperwork needed.
There is no minimum capital need to set up a representative office in France, however these offices cannot conduct any sales-related activities. Only to establish the company's presence in France is the office registered. However, foreign shareholders may have authority over this office. There is no minimum paid-up share capital requirement, similar to the Branch Office.

Criteria for French Company Formation Eligibility

The following qualifying requirements must be met in order to register a corporation in France:

Objects Clause- The memorandum of association's objects clause must describe the purposes for which the company was established.
Information on Key Executives- When requesting company registration in France, all pertinent information regarding the executives must be submitted. Information about the shareholders' names, the registration address, and other details would fall under this category. In addition to this, further shareholder-related information must be disclosed. This would comprise data pertaining to the visa.
Information on Directors- The company must provide information about its directors.
Minimum Capital- A candidate for French business registration must also meet the minimum capital requirement for French company creation. The minimal capital requirement, which might be as low as €1, shall be determined by the shareholders in the AOA whether the application forms a French LLC or a Simplified Joint Stock Company. But if the business is a French Public Limited Company, €37,000 in capital is needed as a minimum. At the time of registration, one-fifth of the authorized capital must be paid.

French Company Registration Procedures

A potential applicant must adhere to the following procedure in order to register a corporation in France:

Choose the Proper Structure
Verify the name on the Commercial Court Registry and the French Patent and Trademark Office (INPI) websites.
Create a corporate bank account to deposit the stock capital of the company.
Take a look at the stockholders and guarantors (PSC)
Prepare the necessary paperwork for the company's operation and register it.

Choose a Suitable Structure-
The applicant for a French company registration must first select an acceptable business structure or vehicle. This would depend on the applicant's business requirements. The French LLC would be a good choice if the applicant wanted to launch a business.
Verify the name on the websites of the Commercial Court Registry and the French Patent and Trademark Office (INPI)-
The applicant must check for a distinctive name in the following stage. The company name must not be insulting and must not conflict with any names already used by French companies.
Create a corporate bank account to deposit the stock capital of the company-
The applicant must open a business bank account as the following stage. There are various kinds of banks that offer banking services to businesses, including BNP Paribas, HSBC, and Societe Generale. It is advised to compare the services provided by all banks before deciding on a suitable bank.
Register at the Centre de Formalites des Enterprises-
The applicant would need to register with the Centre de Formalites des Enterprises in order to register a company in France after creating a corporate bank account. Through this organization, all additional business and tax compliances would be handled. The organization to obtain registration from is the Chambre des Métiers et de l'Artisanat for various types of enterprises, such as those relating to trades or artisans and for independent or freelance professions (CMA). In a similar vein, the Chambre d'Agriculture is the proper place to register a corporation if the business is related to agriculture (CA).
Post Legal Notice of Incorporation on JAL Announces Legales-
The applicant must post a legal notice of incorporation in the neighbourhood newspaper JAL Announces Legales as the following step. To formally and publicly introduce the company to the business world, this procedure is required.
Getting the Identification Number-
This information will be given to the Register Nationale des Entreprises after the Centre de Formalites des Entreprises has received the required paperwork. SIRENE (Systeme Informatique pour le Repertoire des Enterprises), SIRET, and NAF (Nomenclature des Activities Francaises) numbers would then be given to the business.

French Corporate Tax

Corporate tax is due by every French-registered business. There would be the ensuing taxes:

In France, the corporate tax rate is 33.33%. This rule would be applicable to all companies with offices in France. Therefore, a candidate seeking company registration in France would be required to pay this amount of corporate tax.
In France, there is a 20% VAT charge. All enterprises in France must pay VAT, an indirect tax.
In France, a withholding tax is applied to all dividends. All companies that pay dividends must withhold 25% of the dividends. The increased withholding tax rate will take effect on January 1st, 2022.
Corporate tax returns must be filed by businesses by April 30.
Companies are free from paying corporate taxes if they invest in priority sectors. The duration of this exemption is seven years.

Documents Required for French Company Registration

For the purpose of forming a corporation in France, the following papers are necessary:

Information on the Company's Founders, such as their addresses, passport numbers, and other pertinent data
Translation and notarization are required for the shareholders' identification documents.
Information on the company's managers, including copies of their identification documents and letters of appointment
Application Form for Registration and Fees, Manager Document, and the SARL Charter
A declaration that the management has never been convicted of a crime
Articles of Association and the Memorandum of Association must be notarized
Board Decision (If required)
Trade Registrar-issued application forms publication of the decision to incorporate in the National Gazette

FAQs

Concept of LLP

LLP is an alternative corporate business form that gives the benefits of limited liability of a company and the flexibility of a partnership.
The LLP can continue its existence irrespective of changes in partners. It is capable of entering into contracts and holding property in its own name.
The LLP is a separate legal entity, is liable to the full extent of its assets but liability of the partners is limited to their agreed contribution in the LLP.
Further, no partner is liable on account of the independent or un-authorized actions of other partners, thus individual partners are shielded from joint liability created by another partner’s wrongful business decisions or misconduct.
Mutual rights and duties of the partners within a LLP are governed by an agreement between the partners or between the partners and the LLP as the case may be. The LLP, however, is not relieved of the liability for its other obligations as a separate entity.

Since LLP contains elements of both ‘a corporate structure’ as well as ‘a partnership firm structure’ LLP is called a hybrid between a company and a partnership.

Structure of LLP

LLP shall be a body corporate and a legal entity separate from its partners. It will have perpetual succession.

Advantages of LLP

LLP form is a form of business model which:

(i) is organized and operates on the basis of an agreement.

(ii) provides flexibility without imposing detailed legal and procedural requirements

(iii) enables professional/technical expertise and initiative to combine with financial risk-taking capacity in an innovative and efficient manner

Other Countries where this form is available

The LLP structure is available in countries like United Kingdom, United States of America, various Gulf countries, Australia and Singapore. On the advice of experts who have studied LLP legislations in various countries, the LLP Act is broadly based on UK LLP Act 2000 and Singapore LLP Act 2005. Both these Acts allow creation of LLPs in a body corporate form i.e. as a separate legal entity, separate from its partners/members.

Difference between LLP & ‘Traditional Partnership’

Under “traditional partnership firm”, every partner is liable, jointly with all the other partners and also severally for all acts of the firm done while he is a partner.
Under LLP structure, liability of the partner is limited to his agreed contribution. Further, no partner is liable on account of the independent or un-authorized acts of other partners, thus allowing individual partners to be shielded from joint liability created by another partner’s wrongful acts or misconduct

Difference between LLP & Company

A basic difference between an LLP and a joint stock company lies in that the internal governance structure of a company is regulated by statute (i.e. Companies Act, 1956) whereas for an LLP it would be by a contractual agreement between partners.
The management-ownership divide inherent in a company is not there in a limited liability partnership.
LLP will have more flexibility as compared to a company.
LLP will have lesser compliance requirements as compared to a company.