Your French company has survived its first hard years: the Paris lease, the first salaries, the launch costs, and revenue that arrived slower than the business plan promised. Then your accountant sends the draft balance sheet with a warning you did not expect: equity has fallen below half of the share capital, and French law now forces a formal choice between dissolving the company and rebuilding it. For a foreign founder or a foreign group holding a French SAS, the simplified joint-stock company most international investors choose, or a SARL, the limited liability company with stricter voting rules, the most powerful rebuild tool has a musical nickname: the coup d’accordéon, the accordion squeeze. The capital is first cut down to almost nothing to wipe the accumulated losses off the books, then immediately increased again with fresh money, like an accordion that closes before it opens. This article explains, with the exact statutes, the official procedure portal and three recent court rulings, when this operation is the right answer, how it works in practice, what mistakes get it annulled in court, and how a foreign owner runs the whole rescue from abroad, from the shareholder vote to the cleaned Kbis, the identity certificate issued by the greffe, the registry office of the commercial court. It builds on our pillar guide for setting up a company in France as a foreign founder, from bank account to Kbis, VAT and first hire, and zooms in on the rescue operation that saves the companies that guide helped create.

I. What is a coup d’accordéon, and when does a foreign-owned French company need one?

A. How do you know the alarm has rung: equity below half the share capital?

French company law watches one ratio above all others: equity, called capitaux propres, against share capital, called capital social. Equity is what remains for the shareholders once every debt is subtracted from every asset: the initial capital plus reserves plus retained profits, minus accumulated losses. Share capital is only the starting stake written in the articles, les statuts: one euro is legally enough to form a SAS or a SARL, although foreign founders often inject 10,000, 30,000 or 100,000 euros to reassure banks and landlords. As long as the company earns money or breaks even, equity stays above capital and nobody asks questions. But each loss-making year eats into equity while the capital figure on paper stays frozen, and one day the two curves cross the legal tripwire. The computation is always done from the approved annual accounts, never from a rough mid-year feeling, which is why the alarm always rings at the yearly accounts meeting, usually between April and June.

The statute states the trigger in identical terms for every company form. For the SA, the public limited company, and by extension the SAS, article L. 225-248 of the Commercial Code provides: “Si, du fait de pertes constatées dans les documents comptables, les capitaux propres de la société deviennent inférieurs à la moitié du capital social, le conseil d’administration ou le directoire, selon le cas, est tenu dans les quatre mois qui suivent l’approbation des comptes ayant fait apparaître cette perte, de convoquer l’assemblée générale extraordinaire à l’effet de décider s’il y a lieu à dissolution anticipée de la société.” For the SARL, article L. 223-42 of the same Code uses the same mechanism with the SARL’s own decision-making: “les associés décident, dans les quatre mois qui suivent l’approbation des comptes ayant fait apparaître cette perte s’il y a lieu à dissolution anticipée de la société.”

Foreign founders sometimes wonder whether their SAS, a vehicle with freely tailored articles, escapes this old public-company rule. It does not. Article L. 227-1 of the Commercial Code imports the public-company rules into the SAS, stating that they “sont applicables à la société par actions simplifiée” whenever they are compatible with the SAS chapter, and it lists the excluded articles one by one. Since article L. 225-248 is absent from that exclusion list, the half-capital procedure reaches the SAS in full, with the powers of the board exercised by the president of the SAS. The Versailles Court of Appeal said exactly this on 3 June 2025, RG 24/00442, in a case about a Paris-area SAS: “Selon l’article L. 225-248 du code de commerce, applicable aux sociétés par actions simplifiée par renvoi de l’article L. 227-1” (CA Versailles, 3 June 2025, RG 24/00442). The Caen Court of Appeal repeated the point on 19 February 2026, RG 24/02752, for another Normandy SAS, recalling the rule of “l’article L225-248 alinéa 1er du code de commerce, et applicable aux sociétés par actions simplifiée en application des dispositions de l’article L227-1 aliéna 3 du code de commerce” (CA Caen, 19 February 2026, RG 24/02752). So whether you hold a SASU with yourself as sole shareholder or a SARL shared with a French partner, the same four-month machinery starts the day you approve loss-making accounts.

B. Why cut the capital to zero before putting fresh money in?

Once the alarm has rung, the shareholders vote within four months to dissolve the company early or to continue it. Continuing is only the beginning: the statute then gives the company until the end of the second financial year following the loss-making year to rebuild equity to at least half the capital, or to cut the capital by the amount needed so that equity reaches half of the reduced figure. A foreign owner who simply wires fresh cash and increases the capital without touching the old capital often discovers that the arithmetic does not work: the new money sits on top of the old accumulated losses, and equity still fails the half-capital test. The accordion solves this by sequencing two operations. First, the capital is reduced, sometimes all the way to zero or to one euro, and the accounting losses are charged against that reduction, which wipes the slate clean. Second, the capital is immediately increased back up with genuinely new money, so the rebuilt equity consists of real funds rather than a mixture of cash and historic losses.

The official business procedure portal describes this technique by name and confirms it is standard practice: it presents the rescue as a combination of a capital reduction followed by a capital increase, noting that the various rebuild methods may be combined, and that the goal is for equity to stand at no less than half the capital at the end of the two-year period (Service-public.fr, Perte de la moitié des capitaux propres, F36700). Two recent court files show how companies actually use it. In the Versailles case, the extraordinary meeting of a SAS “a décidé de réduire le capital social de 115 316 512 d’euros à 1 153 165,12 euros, par diminution de la valeur nominale de chacune des actions d’un euro à un centime d’euro, le capital étant ainsi divisé par cent”, before issuing a new class of preference shares to the incoming investor (CA Versailles, 3 June 2025, RG 24/00442). In a Paris case decided on 24 February 2026, RG 23/18848, the company’s records showed that “il était indispensable de réduire de façon urgente le capital social à 0 euro, afin d’imputer au maximum les pertes sur le capital social de 632.800 euros, avant d’augmenter ce dernier à hauteur de 6.000.000 euros”, because a plain increase without the prior cut to zero would have left the company below the threshold (CA Paris, Pôle 5, Chambre 8, 24 February 2026, RG 23/18848). In that same file, the incoming majority shareholder had already contributed, in the court’s words, “la somme substantielle de 20.590.725 euros depuis son entrée dans le capital”, which shows the scale of fresh money these rescues can require.

Three features make the accordion attractive for a foreign owner, and each one is confirmed by the sources above. First, it is honest arithmetic: charging the losses against the old capital means the new money is not swallowed by the past, and the half-capital ratio is genuinely restored. Second, it resets the shareholder map: existing holders who refuse to follow the increase are diluted or exit, while the foreign parent or a new investor who funds the increase takes the weight it pays for, which is exactly what happened in both the Versailles and Paris files. Third, when the reduction is driven by losses, it escapes the creditor objection procedure that slows down ordinary capital reductions: article L. 225-205 of the Commercial Code opens the right for bondholders and prior creditors to oppose only “Lorsque l’assemblée approuve un projet de réduction du capital non motivée par des pertes”, so a reduction motivated by documented losses moves without that roadblock. The trade-off is that the operation must be run with surgical fairness, because the same courts that validate the technique punish the shareholders who abuse it, as the second part of this article shows.

II. How does a foreign owner run the operation from abroad without getting it annulled?

A. What kills the rescue: sidelined shareholders, broken equality, and the short deadline to sue?

The Versailles ruling of 3 June 2025 is the leading recent statement on the legal nature of the accordion, and its warning matters more than its validation. The court held that “dans une société par actions simplifiée, l’opération de réduction et celle consécutive d’augmentation de capital simultanées caractérisant une opération de ” coup d’accordéon ” justifiées par des pertes doivent être considérées comme indivisibles, en particulier lorsqu’elles ont pour effet de porter atteinte à l’égalité des actionnaires ou aux droits des créanciers” (CA Versailles, 3 June 2025, RG 24/00442). Indivisible means the two steps stand or fall together: a claimant cannot attack only the reduction while pocketing the increase, and the company cannot defend only the increase while abandoning the reduction. In that case the two ousted managers attacked the reduction that had divided the capital by one hundred, and the court examined the whole combined operation before confirming the first judgment in full: “Confirme le jugement entrepris en toutes ses dispositions”.

The same ruling carries a second lesson that cuts both ways. The court decided that a nullity action against a capital reduction decided as part of an accordion operation, meaning a reduction conditional on a capital increase, falls under a shortened limitation period rather than the ordinary three-year period. In plain terms, a shareholder who believes the accordion was rigged against them must sue quickly, not years later. For the foreign majority owner this is a shield: once the short clock expires, the rescue is safe from late attacks. But it is also a discipline: the minority knows it must act fast, so any procedural shortcut, a late notice, a missing report, a vote counted creatively, will be challenged immediately, while the wounds are fresh and the documents are on the table.

The Caen ruling of 19 February 2026 shows the other classic way rescues die: forgetting a shareholder on the way. In that SAS, the loss-making accounts triggered the article L. 225-248 procedure, the general meeting of 14 November 2022 approved the accounts and rejected early dissolution, with the dissenting holding company neither present nor represented. The ousted minority then tried to force a judicial dissolution for deadlock between shareholders instead. The court shut that door on procedural grounds: “En vertu des dispositions susvisées, la recevabilité de l’action d’un associé aux fins de dissolution d’une société sur le fondement de l’article 1844-7 5° du code civil est subordonnée à la mise en cause de la société elle-même mais aussi de tous les autres associés qui doivent pouvoir discuter le bien-fondé de cette demande, en particulier présenter leurs observations sur l’existence, l’origine et les conséquences de la mésentente invoquée.” And the court added a sentence every foreign owner should memorize: “Le fait que les autres associés de la SAS RDI étaient informés de la demande de dissolution anticipée et avaient tout le loisir d’intervenir volontairement à l’instance est inopérant.” Informing the other shareholders is worthless; they must be formally summoned, and the claim was declared inadmissible: “Déclare irrecevable la demande formée par M. [Y] [B] et la SAS JSM tendant à voir prononcer la dissolution anticipée de la SAS RDI sur le fondement de l’article 1844-7 5° du code civil” (CA Caen, 19 February 2026, RG 24/02752). The underlying rule comes from article 1844-7, 5° of the Civil Code, under which a company ends “Par la dissolution anticipée prononcée par le tribunal à la demande d’un associé pour justes motifs, notamment en cas d’inexécution de ses obligations par un associé, ou de mésentente entre associés paralysant le fonctionnement de la société”. The practical message for an accordion run from abroad is symmetrical: summon every shareholder properly to every vote, give each of them a real chance to subscribe to the increase, and document it, because the squeeze-out that skips a holder will be attacked within the short deadline, while the rescue that respects equality survives.

Equality between shareholders is the thread running through all three rulings. In Paris, the increase reserved a real subscription window: “la souscription étant ouverte pendant une durée de 14 jours à compter de la date de l’assemblée générale”, so that “chaque associé dispose de la possibilité de maintenir sa participation au capital de la société en souscrivant un nombre d’actions proportionnel à sa détention du capital à la date de l’assemblée générale” (CA Paris, 24 February 2026, RG 23/18848). That fourteen-day proportional window is the model to copy: every holder receives individual notice, the same price, the same deadline, and a written record that the offer was made. A foreign parent that funds the whole increase alone should therefore always be able to show that the minority was offered its share first and declined in writing. Conversely, the Versailles indivisibility rule means that if the reduction step unfairly crushes one holder, for example by cancelling their shares while sparing others, the entire accordion including the parent’s fresh shares can be dragged down with it.

B. How do you close, file and clean the Kbis from another country before the two-year deadline?

The closing itself follows a strict choreography, and each step has a deadline the foreign owner must diary from day one. The starting gun is the approval of the loss-making accounts: within four months, the shareholders must vote on early dissolution or continuation. The Caen file shows what that vote looks like in a SAS: “l’assemblée générale délibérant par application de l’article L225-248 du code de commerce”, with the resolution put to the vote, and in that case “Cette résolution, mise aux voix, est repoussée à l’unanimité”, meaning the company continued (CA Caen, 19 February 2026, RG 24/02752). When the company continues, the decision must be published: for a SARL, article R. 223-36 of the Commercial Code provides that “la décision des associés prévue à l’article L. 223-42 est publiée dans un support habilité à recevoir les annonces légales dans le département du siège social, déposée au greffe du tribunal de commerce du lieu de ce siège et inscrite au registre du commerce et des sociétés”, and for companies with a board, article R. 225-166 of the same Code provides that “la décision de l’assemblée générale prévue au premier alinéa de l’article L. 225-248 est déposée au greffe du tribunal de commerce du lieu du siège social et inscrite au registre du commerce et des sociétés”, with additional publication in a gazette authorized to carry legal notices. The procedure portal confirms the same chain in plain language: the continuation or dissolution decision must be published in a gazette authorized for legal notices in the département of the registered seat, so that third parties are informed of the company’s direction (Service-public.fr, F36700). Filings now run through the single online desk, the guichet unique managed with the INPI, the national industrial property institute that operates the company register, and the warning is entered on the company’s record, visible on the Kbis that banks and partners pull.

The accordion itself is voted as one indivisible package, ideally at the same meeting or in linked resolutions: reduction of the capital by cutting the nominal value of each share, charging of the losses against that reduction, then immediate increase by issuing new shares for cash or by setting off a liquid claim, typically the foreign parent’s shareholder current account, the compte courant d’associé. A short but critical legal floor applies to public limited companies: article L. 224-2 of the Commercial Code opens with “Le capital social doit être de 37 000 € au moins”, so an SA cannot simply sit at one euro, while the SAS and SARL have no such statutory floor and can drop to one euro before climbing back. Annual accounts must still be filed every year while the rescue runs: article L. 223-42 is backed by the yearly filing duty, and for companies with shares article L. 225-248 works together with the deposit of accounts at the greffe, since only approved and filed accounts prove the rebuilt ratio.

Running all of this from London, New York, Dubai or Singapore is entirely possible, and most foreign-owned SAS articles allow it, provided the formalities are French even when the owner is not. SAS articles usually permit video meetings and written consultation, while SARL meetings follow stricter statutory rules, so the first step is always to read the articles before sending a video link. The foreign shareholder signs a written proxy or votes in writing within the stated window, the funds are wired with a transfer reference that names the subscription, and a representative in France, a mandataire such as the company’s lawyer or accountant, files the minutes, the updated articles and the gazette certificate through the single desk. Keep every receipt: the portal confirms the reward for finishing the job, because once the company has put its house in order, it may request removal of the half-capital warning from its registration certificate by filing the minutes recording the rebuilt equity, and the warning disappears from the extract that banks and partners check. For groups based in Paris and Ile-de-France, the competent court for any dispute is the commercial court of the registered seat, in practice the Paris commercial court or the Nanterre commercial court for Hauts-de-Seine seats, and the gazette notice must appear in an authorized publication of the seat’s département, so a Paris-seated SAS publishes in a Paris-authorized gazette even if its owner signs in another continent.

If nothing is rebuilt by the end of the second following financial year, the statute offers one last narrow corridor, and the portal spells it out: a company that has not restored its equity within two years gets a further two years to cut its capital down to a minimum threshold, so that after the cut the capital stands at or below one percent of the balance-sheet total of the last year (Service-public.fr, F36700). But at that stage the file is flagged, lenders are nervous, and the sanction the courts describe becomes immediate: any interested party may petition the commercial court for judicial dissolution, while the judge may still grant the company up to six months to complete the repair steps, and cannot order dissolution if the situation has been regularized by the day the court rules on the merits. Rebuilding early through a clean accordion therefore beats waiting for the second window: it restores borrowing capacity, cleans the Kbis, and closes the door to dissolution claims before they are filed.

Conclusion

The accordion is the most decisive answer a foreign owner can give when a French SAS or SARL falls below half its capital, but it is also the most closely watched. The mechanism has five beats: the approved accounts reveal equity below half the capital; the shareholders vote within four months to dissolve or continue; the decision is published through an authorized gazette and filed at the greffe for entry in the trade and companies register, the RCS; the capital is cut to absorb the losses and immediately rebuilt with genuinely new money, with every shareholder offered its proportional share in writing; and the rebuilt accounts are filed so the warning can be erased from the registration extract. Skip a beat and the sanctions escalate exactly as the three 2025 and 2026 rulings show: the reduction and the increase are treated as one indivisible operation, so a flawed squeeze poisons the fresh shares too; challenges must be answered within a shortened limitation period, which rewards the quick and punishes the careless; and a dissolution claim that forgets to summon every shareholder is thrown out as inadmissible, which means the rescue that respects every holder survives while the one that sidelines them does not. The companies that die from this alarm are rarely the ones with the worst numbers; they are the ones whose owners, busy in another country, never convened the meeting or never filed the proof. If your accountant’s draft shows equity sliding toward half the capital, convening that meeting, offering every holder its fourteen-day window, wiring clearly referenced funds, and filing the full chain through the single desk is the most profitable sequence of the year.

Need a quick opinion on your case

Equity below half the capital, an accordion rescue to run, or a dissolution threat hanging over your French SAS, SARL or subsidiary? Our firm offers a phone consultation within 48 hours with a lawyer of the firm to review your accounts, your deadline and your rebuild options. Call 06 46 60 58 22 or write through our contact page. Our office in Paris advises foreign founders across Paris and Ile-de-France and from abroad in English.