Foreign founders often ask whether a statutory auditor must be appointed as soon as a French company is incorporated. For most private companies, the answer is no. The obligation normally depends on the size of the company, the structure of the group and the accounts being certified. It can arise, however, before a founder expects it, particularly where a French subsidiary is controlled by an overseas parent or where several companies must be assessed together.
In France, the statutory auditor is the commissaire aux comptes, usually abbreviated as “CAC”. A CAC is an independent auditor who certifies accounts under a legal mandate. The CAC is not the same professional as an expert-comptable, the accountant who may prepare the books, payroll and tax returns. This distinction matters for an overseas founder building a French Société par Actions Simplifiée (SAS, simplified joint-stock company), Société à Responsabilité Limitée (SARL, private limited company), SASU (one-person SAS) or another French corporate form.
This guide explains the 2026 thresholds, the special rules for groups and controlled subsidiaries, the resolution and filing process, and the consequences of omitting or irregularly appointing a CAC. It also gives a practical document list for a founder or foreign parent who must prove the calculation to the shareholders, the French registry and the auditor. The starting point is the current Code de commerce, including the threshold changes applicable to accounts for financial years opened from 1 January 2024.
It should be read with the firm’s broader French company formation and corporate structuring practice, which provides the wider context for choosing a vehicle, registering the company and organising its first compliance calendar.
I. When must a French company appoint a statutory auditor?
A. Do SAS, SARL and other companies cross the 5/10/50 thresholds?
The ordinary rule for a French commercial company is a “two out of three” test. At the relevant closing date, the company must compare its total balance sheet, its annual turnover before value added tax and its average number of employees. If it exceeds two of the three statutory thresholds, it must appoint at least one CAC. The rule is not limited to one legal form: it may concern an SAS, SASU, SARL, EURL (one-person SARL), Société Anonyme (SA, public limited company), Société en Nom Collectif (SNC, general partnership) or Société en Commandite Simple (SCS, limited partnership), subject to the specific provisions applying to the entity.
The legal source for the ordinary thresholds is Article D. 221-5 of the Code de commerce. It fixes the three criteria at:
- €5,000,000 for total balance sheet assets;
- €10,000,000 for turnover before VAT; and
- 50 average employees during the financial year.
The provision states that “le total du bilan est fixé à 5 000 000 euros” and that the turnover criterion is fixed at “10 000 000 euros”, with an average workforce of “cinquante”. Those are the figures to use for a current French company, not the older €4 million balance-sheet and €8 million turnover figures still reproduced on some private websites. The increase was made by Article 2 of Decree no. 2024-152 of 28 February 2024. The decree also explains that the new rules apply to the accounts and reports relating to financial years opened from 1 January 2024.
The wording of the Code is important. The company does not become subject to a CAC merely because it has a large business plan, a foreign shareholder, a bank loan or a high valuation. The test concerns the figures produced by the accounting records and the statutory definitions of balance sheet, turnover and employee count. A founder should therefore retain the trial balance, the closing accounts, the payroll calculation and the working paper showing which two criteria were crossed. An auditor, shareholder or registry may need to understand how the figures were obtained rather than only seeing the final annual accounts.
The two-out-of-three method also prevents a common mistake: crossing only one threshold is not enough under the ordinary small-company rule. A company with €11 million of turnover, €4 million of balance-sheet total and 38 average employees has crossed the turnover threshold only. It is not in the ordinary mandatory category on that information alone. A company with €11 million of turnover and €5.2 million of balance-sheet total has crossed two criteria, even with fewer than 50 employees. Conversely, a business with 52 employees and €5.2 million of balance-sheet total has also crossed two criteria even if turnover is below €10 million.
The employee criterion is an average over the financial year, not simply the number of people on the payroll on the last day. This is particularly relevant to foreign founders who open a French operating subsidiary, hire a team for a product launch and later reduce the team. The payroll files should show the calculation method, the employment periods and the treatment of part-time staff. A person who works through a foreign service company is not automatically a French employee for this test; the company must analyse the legal and accounting treatment of the relationship rather than count every contractor as staff.
The balance-sheet and turnover measures also need a consistent perimeter. A parent company should not compare its stand-alone French accounts with a subsidiary’s figures and conclude that no obligation exists if the group rules apply. A foreign parent should ask its French accountant to explain whether a company is assessed alone, as the parent of a controlled group or as a controlled subsidiary. The same question should be raised when the French entity is owned through several holding companies, voting agreements or chains of control.
There is no general rule that a new company must name a CAC at incorporation. The appointment can nevertheless be required by the company’s activity, a sector-specific statute, an entity-of-public-interest regime, consolidated-account obligations or a provision in the articles of association. A founder who wants external certification for investors may also appoint one voluntarily. Voluntary appointment is not meaningless: the legal mandate, the auditor’s independence and the rules on the duration of the mandate still need to be respected.
For a foreign founder, the practical distinction between a CAC and an accountant is essential. The accountant may prepare French corporate tax returns, VAT returns, payroll filings, annual accounts and the management report. The CAC performs a statutory certification mission and issues a report to the body that approves the accounts. Using an accountant’s engagement letter as if it were a statutory auditor’s appointment does not satisfy the legal obligation. The resolution should identify the appointed CAC, the scope of the statutory mission and, where relevant, the duration chosen by the shareholders.
The official public guidance confirms that the appointment becomes mandatory when two of the three criteria are exceeded, but the current Code remains the controlling source. A foreign founder should treat the public guidance from Service-Public’s page on the appointment of a statutory auditor and the updated information from the French tax administration as practical explanations, then verify the figures against the Code and the company’s particular group structure.
B. How do group, parent-company and controlled-subsidiary rules change the calculation?
The ordinary stand-alone test is only one part of the analysis. Article L. 821-43 of the Code de commerce creates a specific regime for persons and entities that control one or more companies. Its first paragraph covers the entity at the head of a group when the group formed with the companies it controls exceeds the statutory thresholds for two of three criteria. The provision requires that entity to appoint at least one CAC for the certification of its accounts. The statutory wording is that the relevant entities “désignent au moins un commissaire aux comptes” when the group exceeds two of the three criteria.
For a French parent or a foreign-controlled structure, the group test is not a reason to add every company in the founder’s worldwide portfolio mechanically. The legal perimeter must be mapped using the applicable control rules. The founder should identify direct and indirect control, voting rights, contractual control, the entities actually included in the group and any parent that has already appointed a CAC. A French holding company that controls a French operating subsidiary may have to aggregate the two entities even where each company, considered in isolation, remains below €5 million of balance-sheet total and €10 million of turnover.
The group thresholds referred to by the first paragraph of Article L. 821-43 are connected to Article L. 821-43 itself and the implementing rules in Article D. 821-171. In practical terms, the head-of-group analysis uses the higher 5/10/50 criteria on a cumulative basis: total cumulative balance sheets, cumulative turnover before VAT and cumulative average employees. The calculations must be documented so that the same entity is not counted twice and so that the group’s accounting perimeter can be explained to the auditor.
A second rule concerns a qualifying controlled company. Article D. 821-172 of the Code de commerce fixes the controlled-company thresholds at €2.5 million of total balance sheet, €5 million of turnover before VAT and 25 average employees. Its wording states that “le total du bilan est fixé à 2 500 000 €”, the turnover at “5 000 000 €” and the average workforce at “vingt-cinq”. The rule applies when two of those three criteria are exceeded in the situation described by Article L. 821-43.
This is the point most likely to affect a foreign founder. A French SAS owned by a foreign corporation may look small when its local accounts are reviewed alone, but it may be a controlled company in a qualifying group. If the group and control tests are met, the relevant thresholds may be 2.5/5/25 rather than 5/10/50. A founder should not assume that the foreign parent’s lack of a French Kbis, the French extract from the Trade and Companies Register, removes the group analysis. The legal question is control and the statutory perimeter, not whether the parent has a French registry extract.
The reverse situation also matters. A French company can be the head of a group even if its ultimate shareholder is in the United States, the United Kingdom, Switzerland, Singapore or another jurisdiction. The foreign ownership does not by itself create the appointment, but it does not neutralise French company-law obligations either. The group chart, shareholder register, voting arrangements, board or shareholder agreements, and the accounts of controlled entities should be reviewed together.
There are exclusions and qualifications. Article L. 821-43 does not apply in the same way where the controlling person or entity is itself controlled by a person or entity that has appointed a CAC. There are also special rules for entities required to publish consolidated accounts, public-interest entities and regulated sectors. A consolidated-account obligation can result in the appointment of more than one auditor or additional independence requirements. The correct response is to identify the precise category before applying a simplified threshold table.
Consider three examples. First, a French SAS has €3 million of balance-sheet total, €6 million of turnover and 28 average employees. It crosses the controlled-company thresholds on turnover and employees only if the qualifying group conditions are met; it does not cross the stand-alone thresholds. Second, the same subsidiary has €6 million of turnover and €5.5 million of balance-sheet total. It crosses two controlled-company criteria and should be reviewed for mandatory appointment. Third, a French holding company has €4 million of stand-alone balance-sheet total and €7 million of stand-alone turnover, while its controlled operating subsidiary has €2 million of balance-sheet total and €4 million of turnover. If the group perimeter and control conditions are satisfied, the cumulative figures can change the analysis even though neither entity crosses the ordinary thresholds alone.
Article L. 821-43 also allows one CAC to be appointed under the head-of-group paragraph and the controlled-company paragraph where the statutory conditions permit it. The foreign parent should therefore ask for a group memo that identifies who is legally required to appoint, whether the same auditor can be used, whether the group’s accounts are consolidated and which entities must provide information. That memo is more useful than an unsupported statement that the subsidiary is “too small” for an audit.
The practical lesson is simple: prepare two calculations, not one. The first is the French entity’s own 5/10/50 test. The second is the group and controlled-company analysis, including 2.5/5/25 where Article L. 821-43 applies. Keep the calculations with the annual accounts and refresh them after an acquisition, a capital restructuring, a change in voting rights, a new foreign parent or a rapid hiring campaign.
II. How should a foreign founder appoint and manage the statutory auditor?
A. What vote, mandate and filing steps are required?
Once the threshold or another legal trigger is identified, the company should move from the numerical calculation to a documented corporate decision. Article L. 821-40 of the Code de commerce provides the framework for designation. Outside a statutory appointment made in the articles, the CAC is designated by the ordinary general meeting in a legal person that has such a body, or by the equivalent competent organ in another entity. “Ordinary general meeting” is the English description of an assemblée générale ordinaire, commonly called an AGO.
The agenda and notice should state that the shareholders will appoint the CAC. The resolution should identify the individual auditor or audit company, the term of the mandate and any required alternate auditor. Under Article L. 821-40, an alternate auditor is appointed in the same conditions when the appointed CAC is an individual or a one-person audit company, so that the alternate can replace the holder in the situations listed by the Code. The company should obtain the auditor’s written acceptance and retain evidence that the auditor is registered and independent.
The normal mandate is six financial years. Article L. 821-44 states that the CAC is “nommé pour un mandat de six exercices” and that the functions expire after the meeting that decides on the accounts for the sixth financial year. A replacement auditor generally remains in office only for the balance of the predecessor’s term. The appointment should therefore state whether it is an initial appointment, a renewal or a replacement, and should identify the financial years concerned.
For a voluntary appointment or certain appointments under Article L. 821-43, the shareholders can choose a shorter three-year mandate. Article L. 821-46 provides that “la société peut décider de limiter la durée de son mandat à trois exercices”. That choice should be made expressly in the appointment resolution. A foreign founder should not assume that a three-year engagement letter automatically creates a three-year statutory mandate; the corporate decision and the statutory category must support the choice.
The recent case law shows why the resolution must be carefully prepared. In Cass. com., 14 February 2018, no. 15-16.525, the Court of Cassation held that the question of appointing a CAC in a SARL “doit être inscrite à l’ordre du jour”. A shareholder or foreign parent cannot safely treat the appointment as an informal item raised at the meeting after the notices have been sent. The notice, draft resolution, acceptance letter and corporate minutes should match.
Foreign founders must also manage the cross-border document trail. The appointment file will commonly include the signed minutes, the auditor’s acceptance, the auditor’s registration details, the updated corporate chart, the threshold calculation, the financial statements, the employee calculation and any power of attorney. If a foreign company shareholder signs the resolution, the company should check the signatory’s authority and the requirements for a translation, legalisation or apostille. The precise formalities depend on the country and the filing route, but a French registry should receive a coherent file rather than documents assembled from separate email threads.
The company’s legal representative should then complete the applicable registry and publication formalities. The French one-stop-shop for business formalities is operated through the Institut national de la propriété industrielle (INPI, the National Institute of Industrial Property). The registry handling the company’s registration is the greffe, meaning the court registry, and the updated Kbis is the official extract showing the company’s registration information. The appointment should be reflected in the company’s corporate records and in the relevant registry information where required. The company should keep the filing receipt and the updated extract in its compliance file.
A French company should also give the CAC timely access to its books, contracts, bank records, payroll data, tax filings, related-party transactions and group reporting. The CAC’s work is not a final-day stamp. For a French subsidiary of a foreign group, the auditor may need the parent’s consolidation instructions, transfer-pricing files, intercompany agreements, related-party balances and evidence of control. The founder should agree a calendar for the closing accounts, audit requests, management representation and the meeting approving the accounts.
Older mandates require particular care. In Cass. com., 10 May 2024, no. 22-16.158, the Court of Cassation considered the transition from the former statutory provisions and held that “cette démission ne met pas fin au mandat” in the circumstances described by the decision. A resignation by the former auditor does not automatically allow a company to apply the current thresholds as if the old mandate had never existed. The board, shareholders and accountant should identify the applicable transition rule and appoint a replacement for the remaining term when required.
Finally, do not confuse a statutory audit report with an accountant’s management report or a foreign parent’s audit. A French CAC has a French statutory mandate even if the group also has a global auditor. The French audit opinion, the French appointment and the French corporate approval process remain distinct. A global audit instruction can support the work, but it does not replace the corporate resolution required by French law.
B. What happens if the company omits or irregularly appoints the auditor?
The consequences of a missed appointment are not limited to an administrative inconvenience. Article L. 821-6 of the Code de commerce provides criminal penalties for a director who fails to cause a required appointment. The text provides for “deux ans d’emprisonnement et d’une amende de 30 000 euros” when the director of a company required to have a CAC does not cause the appointment. The same article addresses the failure to invite the CAC to a general meeting and obstruction of audit checks. The director’s residence outside France does not make the French company’s obligations disappear.
There is a statutory route to repair an omission. Article L. 821-47 states that if the competent meeting or organ omits to appoint a CAC, “tout membre de l’assemblée ou de l’organe compétent peut demander en justice la désignation”. The legal representative must be called into the proceedings. The court-appointed mandate ends when the shareholders or competent organ make the appointment. This route can be used by a shareholder who cannot obtain a valid vote, but a foreign founder should not wait for a dispute before regularising an obvious obligation.
Article L. 821-5 deals with nullity. It provides that “sont nulles les délibérations” of the relevant organ taken without regular appointment or on the report of an improperly appointed auditor, subject to the conditions and confirmation mechanism in the provision. The scope of this rule must be read with the type of meeting and the nature of the resolution. It is not correct to say that every corporate act becomes automatically void merely because an auditor was not appointed.
That distinction was clarified by the recent Cass. com., 11 March 2026, no. 24-16.260. The decision concerned an extraordinary general meeting and held that “une délibération d’assemblée générale extraordinaire ne peut être annulée” on that basis because of the absence or irregular designation of a CAC. The decision is important for a foreign shareholder assessing a historic transfer or approval, but it is not a licence to ignore the appointment obligation. The facts, the type of meeting, the legal basis of the claim and the exact resolution must all be checked. An ordinary meeting approving accounts, a transaction relying on certified accounts or an act affected by another defect may require a different analysis.
A company should also examine the risk created by the auditor’s absence when a third party has relied on the accounts. In Cass. com., 11 March 2026, no. 24-21.457, the Court of Cassation stated that “un tiers justifie d’un intérêt à agir en responsabilité à l’encontre d’un commissaire aux comptes” when seeking compensation for a personal loss caused by a fault or negligence in the statutory mission. That case concerns the auditor’s liability, not a blanket liability of the company for every commercial loss, but it shows why the integrity of the audit chain matters to lenders, investors, purchasers and other third parties.
The 2026 case on an extraordinary meeting should also be read alongside Cass. com., 12 October 2010, no. 09-13.006, which distinguished a request designed to repair the omission of a legally mandatory appointment from a request based only on a shareholder agreement. The Court referred to a situation “ne visant pas à réparer l’omission d’une nomination légalement obligatoire”. A contractual right to request an additional auditor, a statutory appointment and a court application under Article L. 821-47 are not interchangeable.
If a foreign founder discovers that the company should have appointed a CAC, the immediate response should be a controlled regularisation:
- freeze any statement that the company is compliant until the threshold and group calculations are reviewed;
- identify the financial years affected and whether an old mandate, resignation or replacement issue exists;
- prepare the stand-alone and group calculations, including the 5/10/50 and 2.5/5/25 tests where relevant;
- obtain an acceptance from a properly registered and independent CAC;
- convene the correct meeting with the appointment on the agenda;
- adopt a resolution stating the identity, mandate length and replacement arrangements;
- complete the INPI, registry and publication steps and keep the receipts;
- ask the CAC and accountant to determine how prior accounts, reports and filings should be regularised.
The audit file should also record why the company believes the appointment is now mandatory, what it did before the meeting, and which accounts the CAC will examine. If a shareholder, creditor or purchaser has already raised the issue, preserve the correspondence and avoid rewriting historic minutes without legal advice. A well-documented correction is more credible than a retrospective document that does not match the company’s accounting, registry and bank records.
For a group with a foreign parent, the compliance file should include the control chart and a signed explanation of the group perimeter. It should identify the parent that may be required to appoint, the French subsidiary potentially subject to the lower thresholds, the auditor already appointed elsewhere in the group and any reason why an exception applies. It should also explain whether the group prepares consolidated accounts and whether the French company is an entity of public interest. This prevents the common error of applying a local threshold table without analysing the group.
The board and shareholders should then set an annual control date. At least once before the close, the company should forecast its balance-sheet total, turnover and workforce; after the close, it should make the final calculation. The same review should occur after a merger, acquisition, disposal, change of control, major hiring programme or change in the parent’s audit status. That calendar can sit alongside the annual accounts, corporate tax and VAT calendar described in our French company compliance calendar for foreign founders.
Conclusion
A French company does not normally need a statutory auditor merely because it is owned by a foreign founder or incorporated as an SAS or SARL. The decisive questions are whether it exceeds two of the current 5/10/50 thresholds, whether a qualifying group or controlled-subsidiary rule brings in the 2.5/5/25 thresholds, whether a sector or consolidated-account rule applies, and whether the shareholders have chosen a voluntary appointment.
The safest process is to make the calculation at each year-end, document the group perimeter, put the appointment on the correct meeting agenda, state the mandate expressly, complete the French registry formalities and preserve the audit file. The 2026 decisions confirm that the consequences depend on the type of corporate resolution and the legal defect, but they do not remove the director’s duty to cause a required appointment. For an overseas shareholder, early review is particularly valuable because control charts, foreign accounts, powers of attorney and translations can delay a decision that is simple in principle.
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