A foreign shareholder does not lose the protection of French commercial-lease law merely because the parent company, directors or financing are located outside France. Since 28 May 2026, an important cash-flow rule applies to eligible commercial leases: the tenant can ask to pay rent monthly, even where the lease originally requires quarterly payment in advance. The right is found in Article L. 145-32-1 of the French Commercial Code, created by Article 62 of Law no. 2026-403 of 26 May 2026.

This is a change in the rhythm of payment, not a rent reduction, a suspension of the lease or permission to pay less than the contractual annual amount. The tenant must first check the activity carried on in the premises, the legal status of the lease, the existence of undisputed arrears and the treatment of charges and value-added tax. The request should then be documented so that a French subsidiary, branch or foreign-owned operating company can show exactly when the new schedule takes effect.

The practical question is therefore not simply whether a foreign-owned company wants smaller instalments. It is whether the statutory conditions are met and whether the company can move to monthly payments without creating a default, triggering a contractual penalty or weakening its evidence in a dispute. The analysis below follows that sequence and includes the safeguards introduced at the same time for guarantees and rent-related litigation.

I. Can a foreign-owned French company demand monthly commercial rent under the 2026 rule?

A. What the new French rule changes for an existing commercial lease

The starting point is the wording of Article L. 145-32-1. The operative sentence states: Le paiement mensuel du loyer est de droit. In practical terms, a qualifying tenant does not need to persuade the landlord to renegotiate the payment calendar. The tenant exercises a statutory right by making a request. The provision then refers to a local used for retail or wholesale commerce, or for commercial or artisanal services, and makes the right conditional on the absence of certain arrears.

The second timing rule is equally important: Cette demande prend effet à compter de l’échéance suivante. The complete rule links that next due date to the payment date provided by the lease. Thus, a tenant should not treat the date of sending the email or registered letter as the date on which a quarterly invoice is automatically divided into three. The request becomes effective at the next contractual rent due date. If a lease requires payment on 1 January, 1 April, 1 July and 1 October, a properly made request sent in February should normally be organised around the 1 April due date, subject to the eligibility conditions and the precise drafting of the lease.

The reform expressly reaches leases already in progress. The current version of Article L. 145-32-1 records that the provision applies to baux en cours d’exécution on the date the law was promulgated. A foreign-owned French subsidiary does not have to wait for a renewal or sign an amendment before asking for monthly payment. The fact that the parent company is incorporated in the United States, the United Kingdom, Canada, Singapore or another country is not an exclusion written into the rule. The relevant questions concern the tenant, the premises, the activity and the rent account.

The legal form also does not decide the issue on its own. A société par actions simplifiée (SAS, a simplified joint-stock company), a société à responsabilité limitée (SARL, a limited-liability company), a branch of a foreign company or another commercial operator must each be analysed against the statutory wording and the lease. Where the French subsidiary is the named tenant, its French legal identity should appear in the request. Where the foreign company itself signed the lease through a branch, the name of that foreign legal person, its French registration details and the authority of the signatory should be checked.

The reform is not a general promise that every business premises tenant can pay monthly. It targets the activities described by the statute. The general commercial-lease framework in Article L. 145-1 of the French Commercial Code is built around premises in which a business undertaking is operated. A company should not infer eligibility from the label “professional premises” alone. A pure office, storage facility, serviced-office arrangement or contract combining premises with substantial services may fall under a different legal analysis. The official Service Public explanation of business domiciliation also distinguishes a commercial lease from a professional lease for a liberal activity; that distinction is relevant when testing the new right.

Article L. 145-32-1 must also be read with the protection in Article L. 145-15 of the French Commercial Code. That provision uses the expression Sont réputés non écrits for clauses or arrangements that defeat the listed statutory rights, and it now lists Article L. 145-32-1. A clause in a qualifying lease that simply says “quarterly payment only and no statutory monthly option” cannot be treated as conclusive merely because it was signed. The tenant may still face a dispute about whether the activity or premises qualifies, but a contrary clause is not a safe reason to abandon the statutory analysis.

For a foreign founder, this matters at two levels. At the operating level, monthly payment can preserve working capital during the first French trading cycle, when payroll, social contributions and customer acquisition costs arrive before the local revenue base is stable. At the group level, the parent company can forecast a regular monthly funding requirement instead of three large quarterly transfers. Neither benefit changes the company’s duty to pay the full rent, respect the permitted use of the premises and keep the lease account current.

B. Which eligibility checks must be completed before sending the request?

The first check is the nature of the premises and activity. Article L. 145-32-1 refers to retail or wholesale commerce and to commercial or artisanal services. A shop selling imported products, a showroom tied to a sales business, a repair workshop or a service location open to customers may fit more naturally within the text than a holding company that merely keeps an administrative office. The company should compare the actual activity, the activity authorised by the lease and the activity registered in the French business records. If those three descriptions diverge, the divergence should be resolved before the request is framed as an unconditional right.

The second check is the lease itself. Identify the parties, the premises, the contractual use, the rent period, the due date, the payment method, the value-added-tax wording, the provisions on service charges and taxes, the indexation clause and every form of security. A document called a “commercial lease” may contain separate charges, a turnover rent, a stepped rent or an advance payment mechanism. The new law changes the periodicity of rent payment; it does not silently rewrite each of those other economic terms.

The third check is the arrears condition. The statute requires the absence of arrears in rent and charges that have not been the subject of a prior contestation. The safest working test is to reconcile the rent ledger, bank statements, invoices, credit notes and charge statements up to the date of the request. An unpaid but undisputed quarterly invoice is a material obstacle. A charge genuinely challenged before the request should be separated from an amount that was merely left unpaid without explanation. A company should not invent a dispute after the event to make a late payment look contested.

That reconciliation is particularly important for foreign-owned companies because the payment chain may pass through a parent treasury centre, an external accountant and a French bank. A transfer in the parent company’s currency is not proof that the French tenant paid the correct euro amount on time. The file should show the French tenant’s invoices, the euro amount due, the value date, any bank fees, the recipient account and the allocation of the payment to rent or charges. If the parent funds the subsidiary through a shareholder loan or capital contribution, that funding evidence is separate from proof that the tenant discharged its lease obligation.

The fourth check is the distinction between rent and ancillary sums. Article L. 145-32-1 grants monthly payment of the rent. It should not be read as a blanket order that every service charge, property tax recharge, insurance cost, works contribution or adjustment must be divided into identical monthly amounts. Article L. 145-40-2 of the French Commercial Code requires a precise and limited inventory of the categories of charges, taxes and royalties connected with the lease, together with an indication of their allocation. The annual statement and the lease’s own reconciliation process must remain intelligible after the rent frequency changes.

The fifth check is corporate authority. A foreign shareholder does not normally sign in the name of the French company merely because it owns the shares. The request should be signed by the legal representative recorded for the tenant or by a person holding a clear mandate. The company’s extrait Kbis, the official extract of its registration in the French Trade and Companies Register, can help identify the representative. The greffe, the registry office attached to the competent court, is not the recipient of a monthly-rent request, but the registration record helps prove who may bind the tenant. If a parent-company officer signs under a power of attorney, keep the signed mandate, any translation and evidence of the authority granted.

A short eligibility file should contain: the signed lease and amendments; the French tenant’s registration details; a description of the business actually operated; a rent and charge reconciliation; copies of recent invoices and payments; the proposed monthly calculation; and proof of the signatory’s authority. The file can be shared with the foreign parent, the accountant and the bank, but the formal request should remain a communication from the tenant to the landlord.

Consider a French SAS owned by a United States parent that runs a customer-facing equipment showroom. The lease requires €36,000 excluding value-added tax per quarter, payable in advance. Annual base rent is €144,000, so the economic monthly base is €12,000. If the company has no undisputed arrears and the lease and activity fit the statute, its request can seek payment of €12,000 per month from the next contractual due date, with value-added tax and properly documented charges treated according to the lease and applicable tax rules. By contrast, the company cannot use the request to pay €10,000, postpone an unpaid prior quarter or suspend disputed charges without explaining the legal basis for that separate position.

That example also shows why a foreign-owned company should avoid relying on a generic template that only says “please change quarterly rent to monthly rent.” The request must make the statutory link visible, state the effective date sought, confirm the arrears position accurately and distinguish the base rent from other items. Precision reduces the chance that the landlord treats the message as an informal request for a commercial concession.

II. How should a foreign founder request monthly rent, and what happens if the landlord refuses?

A. What should the written request contain and when does it take effect?

The first practical step is an internal review of the payment calendar. Mark the next rent due date, the date on which the request will be sent, the direct-debit presentation date and the date on which the accounting system will switch from quarterly to monthly. Check whether the lease sends invoices or calls for payment automatically, and whether the bank mandate identifies the landlord or a property manager. The company should preserve enough liquidity for the old schedule until the legal change is clearly effective; it should not allow an automated debit to fail while the parties argue about timing.

The written request should identify the tenant’s exact corporate name, registration number, registered office, premises and lease date. It should state that the tenant requests monthly payment under Article L. 145-32-1, identify the next contractual rent due date and set out the proposed monthly base amount. If the rent is indexed, explain whether the amount used is the currently applicable amount and how future indexation will be reflected. If the lease bills value-added tax or charges separately, say that the request concerns the rent periodicity and does not seek to remove or alter those separate contractual items.

The request should also deal openly with arrears. A simple sentence confirming that the rent and charges are paid and that no undisputed arrears remain is useful only if the ledger supports it. If a charge is disputed, identify the invoice, the date of the prior objection and the amount. A vague statement that “all sums are contested” is likely to weaken rather than strengthen the file. The company should attach a current statement or offer to provide one, while keeping commercially sensitive bank data limited to what is needed to prove payment.

For evidence, send the request by a channel that produces a reliable date and preserves the full content. Email to the contractual contact can be combined with a lettre recommandée avec demande d’avis de réception, a French registered letter with acknowledgment of receipt. A property manager may acknowledge the request without having power to amend or administer the lease; check the management mandate if the response matters. Keep the sent message, attachments, delivery proof, automatic reply, receipt, landlord response and the calculation used by the accounting team.

A usable English wording can be concise: “The tenant requests the benefit of Article L. 145-32-1 of the French Commercial Code and asks that rent be paid monthly from the next contractual rent due date. The tenant confirms, on the basis of its rent and charge ledger as at [date], that no undisputed rent or charge arrears are outstanding. The current monthly base rent is [amount], exclusive of [items treated separately under the lease]. Please confirm the account details and payment reference for the new schedule.” This is a working formulation, not a substitute for checking the lease or the activity.

The words “from the next contractual rent due date” should not be replaced by “immediately” unless the dates genuinely coincide. Suppose the quarterly due dates are 5 January, 5 April, 5 July and 5 October. A request received on 20 March can be prepared to operate on 5 April. A request received on 10 April cannot normally turn the 5 April instalment into three retroactive monthly instalments without a separate agreement. The tenant should make the calculation transparent and avoid presenting a retroactive credit as though Article L. 145-32-1 created one.

Once the request is effective, the company should issue or process the monthly payment in a way that matches the lease account. The accountant should update the recurring payment instruction, the rent schedule and the forecast. The parent treasury team should use the French tenant’s invoice reference. If the landlord’s software continues to generate a quarterly invoice, the tenant should request a corrected schedule in writing and keep the full amount available. The objective is a consistent audit trail, not a dispute over the appearance of an invoice.

Monthly payment does not alter annual rent. It does not remove a contractual indexation clause, a turnover component, a lawful tax recharge or an obligation to insure the premises. Article L. 145-38 governs the timing and limits of a statutory triennial rent review, while Article L. 145-39 addresses review through an escalation clause when the rent changes by more than one quarter, with the statutory annual increase limit described there. The new monthly schedule is a payment mechanism, not a new method for recalculating the rent.

The same reasoning applies to the commercial rent index. The Indice des loyers commerciaux (ILC, the French commercial rent index) may change the amount payable under the lease when a valid indexation or review provision operates. A monthly tenant must therefore track the indexation date and formula rather than assume that twelve equal payments remain fixed forever. The 2026 reform also created Article L. 145-38-1, which allows a clause that limits annual ILC variation in both directions. That rule concerns the variation of rent; Article L. 145-32-1 concerns its payment frequency.

Value-added tax requires the same discipline. Whether commercial rent is invoiced with VAT depends on the lease and tax treatment, not on the tenant’s nationality or on the fact that instalments are monthly. The official tax doctrine explains how rent advances and related amounts enter the VAT base when the landlord is liable for VAT. The tenant should reconcile the landlord’s invoice, the VAT amount and the amount recorded for deduction with its accountant. Monthly payment is not a VAT registration solution and it does not change the tenant’s existing French tax reporting position.

B. What safeguards apply to guarantees, arrears, refusal and court action?

The 2026 reform links monthly payment with a new protection against excessive security demands for certain leases. The current version of Article L. 145-40 of the French Commercial Code provides that, for a local covered by Article L. 145-32-1, guarantees requested from the tenant cannot exceed the rent due for one quarter. The rule also addresses the value of goods, securities, commitments and guarantees of any nature required to secure performance, and states that those capped sums do not bear interest for the tenant. Its transitional wording must be read carefully: the cap for the new guarantee paragraph applies to leases concluded or renewed from the date specified by the law, whereas the monthly-payment right reaches leases already in progress.

For example, if the current annual base rent is €120,000 and the new monthly equivalent is €10,000, a covered new or renewed lease cannot demand a security package exceeding three months of rent merely by combining a deposit, a parent guarantee and another security. The precise application to a particular guarantee, especially an independently documented bank or parent-company undertaking, should be reviewed against the wording of the lease and the transaction. The point is that a foreign parent should not assume that its guarantee is outside the statutory calculation simply because no cash deposit was paid.

The same Article L. 145-40 continues to address rent paid in advance. It states that advance rent, including amounts treated as security, bears interest for the tenant for the portion exceeding more than two rent terms, at the rate referred to by the provision. The 2025 decision of the Cour de cassation, Third Civil Chamber, 7 May 2025, no. 23-15.394, is useful for understanding the interaction. The official decision describes the rule as covering les obligations imposées au locataire au-delà de celles qui découlent de la loi ou des usages and explains that the statutory interest mechanism matters when advance payment is assessed. The result is not that every quarterly payment is unlawful; it is that the payment structure, the number of terms advanced and the legal counterparty must be calculated rather than assumed.

If the landlord refuses the request, begin by separating a refusal based on eligibility from a refusal based only on the old payment clause. Ask the landlord to identify the alleged defect: activity, premises, arrears, calculation, authority or timing. A refusal that relies solely on a clause designed to defeat Article L. 145-32-1 is vulnerable in light of Article L. 145-15. A refusal that raises a genuine question about whether the premises are within the statutory activity categories requires a legal analysis and evidence, not simply a stronger email.

Do not respond to a refusal by stopping all payments. Non-payment can create an independent default even if the tenant has a good argument about payment frequency. Continue to reserve the company’s position, keep the undisputed amount funded and obtain advice on the safest method of tendering or, where appropriate, seeking judicial directions. The company should never use the monthly-payment request as a reason to withhold charges, insurance evidence or other obligations that are unrelated to the periodicity of rent.

A lease may contain a clause résolutoire, a contractual termination clause triggered by a specified default. Article L. 145-41 of the French Commercial Code provides that such a clause normally takes effect only one month after an unanswered formal demand for payment, and the demand must mention that period. Since the 2026 reform, the provision also states conditions for granting payment time and suspending the clause when the tenant shows an ability to pay the lease debt and resumes full current rent before the first hearing.

The case law shows why dates and wording matter. In its 8 December 2010 judgment, Third Civil Chamber, no. 09-16.939, the Cour de cassation held that a fifteen-day period in the clause could tenir en échec les dispositions d’ordre public governing the statutory one-month period, and treated the clause as invalid in the circumstances described by the judgment. The decision is available on Légifrance. In its 11 December 2013 judgment, Third Civil Chamber, no. 12-22.616, the Court again considered a clause that did not provide at least one month; the official text explains that such a clause can defeat Article L. 145-41 and links the analysis to the published decision.

A foreign-owned company facing a commandement de payer, a formal demand served by a French judicial officer, should obtain the document immediately and check the exact sums, the date of service, the one-month period, the rent schedule and the charges included. The command is not cured merely because the tenant believes the landlord should have accepted monthly payment. Conversely, a defective command is not harmless if the landlord is trying to trigger the lease termination clause. Preserve the envelope, service report, ledger, bank evidence and every prior objection.

French courts can sometimes grant time to pay or suspend the effects of a termination clause while the lease has not been finally terminated, but the tenant must present a credible plan. In its 3 June 2021 judgment, Third Civil Chamber, no. 20-14.677, the Cour de cassation confirmed that le locataire d’un bail commercial peut demander … des délais de grâce and suspension in the statutory setting while the termination has not been finally established. The official text is available on Légifrance. The general power to defer or spread payment is also framed by Article 1343-5 of the French Civil Code, which permits a judge, within the statutory limit, to take account of the debtor’s situation and the creditor’s needs.

The judgment of the Third Civil Chamber on 24 November 2021, no. 19-26.174, is another warning for a company that relies on general assertions. The case concerned a commercial lease, disputed sums, charges and a request for payment time; the official decision records the importance of identifying the debt, explaining the charge allocation and presenting a viable proposal. It is available on Légifrance. A foreign parent should therefore prepare a cash-flow schedule, evidence of current rent and a precise explanation of any disputed charge before the first procedural hearing.

Two general contract provisions help frame the relationship but do not replace the special commercial-lease rules. Under Article 1103 of the French Civil Code, Les contrats légalement formés tiennent lieu de loi, subject to mandatory statutory provisions such as the new monthly-payment right. Under Article 1104, Les contrats doivent être négociés, formés et exécutés de bonne foi. A landlord and tenant should exchange accurate calculations and not use a technical request about payment frequency to conceal arrears or create a surprise default.

Article 1217 of the Civil Code also lists the remedies available when a contractual obligation is not performed, including enforcement, reduction, termination and compensation, subject to their legal conditions. That general menu does not allow the tenant to choose an incompatible remedy or to ignore the special one-month mechanism in Article L. 145-41. The tenant should state whether it seeks implementation of Article L. 145-32-1, correction of an account, an injunction, payment time or damages. Mixing those requests without a calculation can make an otherwise strong position difficult to present.

Finally, record the date on which the company learned of the problem. Article L. 145-60 of the French Commercial Code provides a two-year limitation period for actions exercised under the commercial-lease chapter. The classification of a claim and the starting point can be debated, so a company should not wait until the end of a two-year period merely because the account remains open. A dated legal file is especially important when the foreign parent changes treasury providers, directors or advisers during the lease.

For an international group, the safest escalation path is structured. First, complete the eligibility and arrears reconciliation. Second, send a dated request that states the effective date and calculation. Third, obtain a written response and correct the payment mandate. Fourth, if the landlord refuses, keep paying or tendering the undisputed amount while preserving the challenge and gather the lease evidence. Fifth, if a formal demand, termination clause or court deadline appears, have the demand and the response reviewed immediately. This sequence protects cash flow without treating the statutory right as a licence for unilateral underpayment.

Conclusion

Since 28 May 2026, a foreign-owned French company may have a statutory route to monthly commercial-rent payments without waiting for the landlord to volunteer an amendment. The right is strongest where the tenant operates a qualifying retail, wholesale, commercial-service or artisanal activity, the lease is within the commercial-lease framework, no undisputed rent or charge arrears remain and the request is tied to the next contractual due date. Foreign ownership is not the disqualifying factor; inaccurate corporate authority, an unsuitable premises classification or an unreconciled rent account is more likely to create difficulty.

The request should preserve the annual economic rent, separate charges and value-added tax, track indexation and update the payment mandate. The guarantee cap and the rules on advance rent may improve the position in new or renewed leases, but their transitional rules differ from the rule for existing leases. If a landlord refuses or serves a formal payment demand, the company should keep the undisputed funds available and address the one-month termination-clause procedure without delay. A foreign founder can use the reform effectively when the request is treated as a documented legal step rather than as an informal request for easier billing.

The official legal texts and decisions linked above should be checked against the facts and the version in force on the relevant date. For a wider overview of French company formation and the first corporate compliance steps, see the firm’s French company formation and corporate law hub.