What is an SA in France? What are its advantages? What should you know about this legal form, used by many French companies? This article will explain how an SA works, how to create one, and the differences between SA, SAS, and SARL.

What’s in this article?

• What is a société anonyme (SA)?
  
• What are the main features of an SA?
  
• How does an SA work?
  
• What tax regime does an SA fall under?
  
• What are the pros and cons of an SA?
  
• How do you set up an SA?
  
• Transferring an SA
  
• What are the differences between SA, SAS, and SARL?
  

What is a société anonyme (SA)?

An SA, or “société anonyme” (usually translated as a “public limited company” in English), is a legal form for large companies that want to be listed on the stock market. An SA is a joint-stock company in which the capital is divided into shares, and shareholders own these shares based on how much they contribute.

Unlike the société par actions simplifiée (SAS) and the société par actions simplifiée unipersonnelle (SASU), an SA can raise money for projects by making a public offering. Its shares can therefore be traded on the regulated market.

What are the main features of an SA?

An SA is suitable for most business sectors, except for regulated sectors such as tobacco shops and insurance.

Number of shareholders

An SA must have two shareholders or more; this minimum goes up to seven shareholders if the business is listed on the stock exchange. Shareholders can be individuals or legal entities, such as associations or companies. A shareholder’s liability is limited to the amount of their contributions in cash or in kind. Shareholders also have financial, voting, and information rights.

Share capital

The minimum share capital for an SA is €37,000, or €225,000 if it goes public. Half of any cash contribution must be deposited in the company’s bank account at the time of registration. The remaining half must be provided within five years. A contribution auditor must be appointed to assess the company’s in-kind contributions.

How does an SA work?

An SA can be managed in two ways – either by a board of directors and a CEO, or by a supervisory board and an executive board. SAs must also hold a general meeting of shareholders.

Board of directors and CEO

The board of directors, consisting of 3 to 18 members, sets the overall business strategy and makes sure that it operates accordingly. Board members are appointed either in the articles of association or by the general meeting of shareholders. The chairperson of the board of directors and the CEO are chosen among the directors (see this article by the French government for more about the board of directors).

The CEO can also be the chairperson of the board of directors. In this case, they become the chairperson and CEO of the company.

Note that the CEO’s term of office is unlimited. However the board of directors has the power to remove them from office.

Supervisory board and executive board

The executive board consists of two to five members, or seven if the company is listed on the stock exchange. The president oversees and leads this management body after being appointed by the supervisory board. The supervisory board has 3 to 18 members, who oversee the company’s management and accounts. The board also appoints the members of the executive board (for more details on the different management bodies of an SA, see the French government article)

General meeting

The SA hosts general meetings to gather all of its shareholders. In a general meeting, the SA appoints directors or supervisory board members in addition to statutory auditors; distributes the company’s profits; amends the articles of association; approves financial statements; and dissolves the SA (if needed).

What tax regime does an SA fall under?

SAs are automatically subject to corporate income tax (IS, from the French “impôt sur les sociétés”), but they can choose to pay income tax (IR, from the French “impôt sur le revenu”) if they meet certain eligibility criteria. You can find out more about switching from corporate income tax to income tax in the article by the French tax authorities.

Directors’ tax regime

The compensation of the CEO and the chairperson is subject to income tax as wages and salaries. The members of the board of directors also receive a fixed amount, which is taxed at a flat rate (PFU, from the French “prélèvement forfaitaire unique”) of 12.8% for income tax and 17.2% for social security contributions.

Similarly, executive board members’ pay is subject to income tax as wages and salaries. Supervisory board members’ pay is subject to PFU.

Note that all paid executives are classified as “assimilated employees” and are covered by the general social security system.

Taxation of shareholders

When an SA makes a profit, it can pay out dividends to shareholders. Dividends are categorised as income from transferable securities. They are taxed at a flat rate of 30%, of which 12.8% is for income tax and 17.2% for social security contributions.

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What are the pros and cons of an SA?

SAs offer several advantages for large companies, including:

• Legal form recognised by banks, customers, suppliers, and investors
  
• Division of power between management bodies
  
• Easier transfer of shares and onboarding of new shareholders
  
• Liability limited to the contribution amount
  
• Ability to trade on the regulated market
  
• Employee status for directors
  

However, there are some drawbacks with this legal form:

• Minimum share capital requirement
  
• Appointment of a contributions auditor is mandatory and can be costly – between €500 and €3,000
  
• Complicated administrative formalities
  

How do you set up an SA?

There are five main steps in setting up an SA:

1. Drafting bylaws or articles of association (a document that details the company’s operating, tax, and legal rules) and choosing the company name
   
2. Domiciling or choosing a registered office
   
3. Depositing the share capital in the company’s bank account
   
4. Publishing a notice of incorporation in a legal gazette
   
5. Registering the SA online through a business formalities portal. For further information on registering an SA, see the French government article on the subject.
   

Costs associated with setting up an SA

Setting up an SA is often costly. For example, hiring a legal professional to draft the articles of association can cost between €1,500 and €2,000.

The contribution auditor’s assessment could cost between €500 and €3,000. The cost of publishing a notice of incorporation is fixed at €387 for SAs.

For an SA carrying out commercial activities, you can expect to pay €37.45, plus an additional €15 for craft activities. You’ll also have to pay a fee of €21.41 to declare the beneficial owners of the company.

Finally, the cost of domiciling your company will vary depending on the option you choose. If your registered office is located in a business incubator, a domiciliation company, or in commercial premises, you risk paying higher fees.

Transferring an SA

In general, you can transfer the shares of an SA to a family member or to a third party. When shares are transferred, a fixed registration levy of 0.1% of the transfer price is paid by the buyer when the transfer is reported to the tax authorities. However, this rate rises to 5% for transfers involving a company that primarily holds real estate assets.

What are the differences between SA, SAS, and SARL?

There are several basic differences between SA, SAS and SARL (or "société à responsabilité limitée"). The table below summarises the main features of these legal forms: