You formed your French company from London, New York, Dubai or Singapore, following the standard path for setting up a company in France as a foreign founder: capital deposited, company registered, Kbis extract in hand, bank account open. Then real life arrives. Either the business grows faster than its equity and the company needs fresh money, or the first full-year accounts show losses that cut shareholders’ equity below half of the share capital. Both situations lead to the same crossroads: put money back in through a formal capital increase, or leave the company exposed to a dissolution claim that any interested party may bring before the court.

This guide is published from Paris by the law office of Maître Reda Kohen (+33 6 46 60 58 22) for foreign shareholders, sole shareholders and company presidents who live outside France. It covers the two procedures side by side: the voluntary increase of the share capital, and the compulsory rescue timetable that starts as soon as equity falls below half of the capital. Every step can be completed remotely when the articles of association, called the statuts, allow written consultation and powers of attorney. Every decisive rule below is quoted from the statute or the Court of Cassation, the Cour de cassation, as in force on 3 October 2026.

A few French terms return constantly, so here is the key. A SAS, société par actions simplifiée, is the flexible joint-stock company most foreign founders choose. A SARL, société à responsabilité limitée, is the limited liability company with more rigid statutory rules. The EGM, assemblée générale extraordinaire, is the extraordinary meeting of shareholders or associates which alone can amend the capital. The RCS, registre du commerce et des sociétés, is the Trade and Companies Register kept by the greffe, the registry office of the commercial court. The Kbis is the official extract of that entry, the identity card of the company which every bank demands. The BODACC, Bulletin officiel des annonces civiles et commerciales, is the official gazette which publishes RCS entries. The Guichet unique is the single online filing window operated by the INPI, the French office for intellectual property and company formalities, through which every capital change must now pass.

I. Increase the Share Capital of Your French Company Without Breaching Subscription Rights

A capital increase is the clean way to fund growth, to bring in a new investor, or to repair a balance sheet. It is also the procedure where foreign owners most often make an irreversible mistake: subscribing the whole increase themselves and wiping out a minority holder, or contributing assets valued by an auditor who was not independent. French courts annul such operations years later. The rules below show how to do it safely.

A. Who votes the increase and who is entitled to subscribe first

Only the extraordinary meeting decides. Article L. 225-129 of the Commercial Code states: “L’assemblée générale extraordinaire est seule compétente pour décider, sur le rapport du conseil d’administration ou du directoire, une augmentation de capital immédiate ou à terme.” No president, no manager, no majority shareholder acting alone can increase the capital without that collective decision, and the same article requires the operation to be completed, in principle, within five years of the decision or delegation. In a SAS, the articles organise how that collective decision is taken, because article L. 227-1 of the Commercial Code provides that a simplified joint-stock company “peut être instituée par une ou plusieurs personnes qui ne supportent les pertes qu’à concurrence de leur apport” and that the powers of a board of directors are exercised by the president of the SAS or the officers named in the statuts. In practice, the foreign president convenes the meeting, but the meeting itself votes. In a SARL, the associates vote the capital change by the majority required to amend the statuts. From abroad, check first whether the statuts allow videoconference or written consultation, then collect signed powers of attorney, an attendance sheet and full minutes: the greffe will ask for them.

Once the increase is voted, the existing holders come first. Article L. 225-132 of the Commercial Code states: “Les actions comportent un droit préférentiel de souscription aux augmentations de capital.” It continues: “Les actionnaires ont, proportionnellement au montant de leurs actions, un droit de préférence à la souscription des actions de numéraire émises pour réaliser une augmentation de capital.” This preferential subscription right, the droit préférentiel de souscription, means a foreign majority holder cannot simply subscribe the entire cash increase and dilute a French minority holder or a co-founder who stayed in the capital. Each holder may subscribe in proportion to the shares already held, may waive the right individually, or may transfer it where the statuts allow. Any shortcut around these rights exposes the operation to annulment at the request of the squeezed-out holder.

Bringing in a genuinely new investor while sidelining the existing holders is possible, but only through the formal suppression of the preferential right. Article L. 225-135 of the Commercial Code provides that the meeting which decides or authorises the increase “peut supprimer le droit préférentiel de souscription pour la totalité de l’augmentation de capital ou pour une ou plusieurs tranches de cette augmentation”. That vote is valid only on the basis of reports from management and, where one exists, from the statutory auditor, the commissaire aux comptes. The common foreign-founder error is to treat the suppression as a formality and to vote it without those reports: the incoming investor then holds shares whose issue can be challenged for years. Prepare the reports first, vote second, subscribe third.

The most dangerous shortcut has a name in practice: the accordion squeeze, or coup d’accordéon, where the capital is first reduced to zero and immediately re-increased so that only the majority subscriber survives. The Court of Cassation polices it strictly. In a case where the extraordinary meeting of the SAS Intégrale had voted on 30 June 2015 to reduce the capital to zero and re-increase it while keeping preferential rights on paper, with the president ending up as sole shareholder, the Commercial Chamber quashed the appeal decision which had tolerated the scheme. Cass. com., 4 January 2023, No. 21-10.609 holds: “Il résulte de ces textes que la réduction à zéro du capital d’une société par actions n’est licite que si elle est décidée sous la condition suspensive d’une augmentation effective de son capital amenant celui-ci à un montant au moins égal au montant minimum légal ou statutaire.” A reduction to zero is lawful only if it is decided under the condition precedent of an effective increase bringing the capital back to at least the legal or statutory minimum. A foreign owner who uses an accordion to eliminate a partner without meeting that condition hands the eliminated partner the very weapon for annulment.

B. Paying in cash or in assets: the valuation report and the independence trap

Cash increases look simple and most foreign recapitalisations are paid in cash, but the paper trail must be complete. Subscriptions are collected in proportion to existing holdings unless rights were individually waived or formally suppressed, the funds are deposited, and the meeting records the completion of the increase before the statuts are updated and filed. Keep every subscription form, every transfer slip and the deposit certificate together: three years later, when a bank or a buyer audits the company, the missing slip is always the one they ask for. The updated statuts showing the new capital, the minutes recording completion, and the legal announcement are then filed through the Guichet unique, and the RCS entry produces a fresh Kbis which alone proves the new capital to third parties.

Contributions in kind, apports en nature, deserve more caution. Foreign groups frequently contribute equipment, software, patents or shares of another company instead of wiring cash. The statute then imposes an independent valuation. Article L. 225-147 of the Commercial Code states: “En cas d’apports en nature ou de stipulation d’avantages particuliers, un ou plusieurs commissaires aux apports sont désignés à l’unanimité des actionnaires ou, à défaut, par décision de justice.” The contribution auditor, the commissaire aux apports, is therefore chosen unanimously by the shareholders or, failing unanimity, appointed by the court. The same article adds: “Ces commissaires apprécient, sous leur responsabilité, la valeur des apports en nature et les avantages particuliers.” They value the assets under their own liability, their report is made available to the shareholders within a time limit set by decree, and where the meeting approves the valuation and any special advantages, it records the completion of the capital increase: “Si l’assemblée approuve l’évaluation des apports et l’octroi d’avantages particuliers, elle constate la réalisation de l’augmentation du capital.” From abroad, organise unanimous written designation where the statuts permit it; where even one holder refuses, petition the president of the commercial court for a judicial appointment rather than appointing unilaterally.

The independence of that auditor is not a nicety but a condition of validity, and the Court of Cassation drew the line in 2026. In a dispute where shares of the company CG2A were contributed to the SAS AGS and the appointed contribution auditor turned out to be the manager of the firm which had previously performed an accounting assignment for CG2A, the Commercial Chamber rejected the challenge against the annulment. Cass. com., 28 May 2026, No. 25-13.211, published in the Bulletin holds: “Il résulte de la combinaison des articles L. 225-149-3, dans sa rédaction alors applicable, L. 225-147, L. 227-1 et L. 822-11-3, devenu L. 821-31, du code de commerce que les fonctions de commissaire aux apports sont, à peine de nullité des délibérations prises au vu de son rapport, incompatibles avec toute activité ou tout acte de nature à porter atteinte à son indépendance à l’égard de l’une des parties à l’opération d’apport ou d’une personne qui la contrôle ou qu’elle contrôle.” The Court specifies: “Il en est ainsi lorsque le commissaire aux apports a, avant sa désignation, accompli, pour le compte de la société dont les titres sont apportés, une mission d’expertise-comptable de cette société.” And it adds a sting in the tail: “Cette nullité s’étend à la lettre de mission elle-même.” Where the auditor had previously acted as accountant for the contributed company, every resolution adopted on the basis of the report is void, and even the engagement letter falls with it. For a foreign group, the lesson is blunt: never appoint the group’s usual accountant or statutory auditor to value the group’s own contribution. Choose a professional with no prior mission for any party to the transfer or any company controlling or controlled by them, document that negative check in writing, and keep the proof with the report.

Two practical consequences follow for absentee owners. First, the valuation report must actually reach the shareholders before they vote; an EGM convened from abroad by email with the report attached at the last minute invites exactly the annulment suit the procedure is meant to prevent. Circulate the report within the statutory time, record its availability in the minutes, and have each holder confirm receipt. Second, where the meeting wishes to reduce the valuation proposed by the auditor, the contributor’s position becomes delicate and the operation should be paused for advice rather than forced through: an overvalued contribution exposes the contributor to liability towards the company and an undervalued one to disputes with co-holders. A calm, documented valuation is cheaper than any litigation about it.

II. Rebuild Equity After Losses Cut It Below Half the Capital Within the Legal Deadlines

Voluntary increases belong to strategy; the second procedure belongs to survival. Where losses shown in the approved accounts drive shareholders’ equity, the capitaux propres, below half of the share capital, French law starts a clock. The shareholders must vote within four months on early dissolution, and where the company continues, it must restore its equity by the end of the second financial year after the loss-making year, either by recapitalising or by reducing the capital. Miss the timetable and any interested party, a creditor, a minority holder, even a former partner, may ask the court to dissolve the company. Foreign owners discover this rule too often through a bank refusing credit or a buyer discounting the price: the Kbis may look normal while the balance sheet already triggers the alarm.

A. Detect the trigger, vote within four months, and publish the decision

The trigger is accounting, not cash: equity below half of the capital as shown in the documents comptables once the annual accounts are approved. For the SARL, article L. 223-42 of the Commercial Code states: “Si, du fait de pertes constatées dans les documents comptables, les capitaux propres de la société deviennent inférieurs à la moitié du capital social, 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.” Where dissolution is not voted, the article continues: “la société est tenue, au plus tard à la clôture du deuxième exercice suivant celui au cours duquel la constatation des pertes est intervenue, de reconstituer ses capitaux propres à concurrence d’une valeur au moins égale à la moitié du capital social ou de réduire son capital social du montant nécessaire pour que la valeur des capitaux propres soit au moins égale à la moitié de son montant.” The company must therefore, no later than the end of the second financial year after the year the losses were recorded, either rebuild equity to at least half of the capital or reduce the capital so that equity again reaches half of the reduced amount. In both cases the adopted resolution must be published as fixed by decree.

For joint-stock companies, including the SAS, the mechanism is identical in substance but the convening duty lies with management. Article L. 225-248 of the Commercial Code states: “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.” In a SAS, that duty falls on the president by virtue of the attribution rule recalled above. Note the starting point carefully: the four months run from the approval of the accounts showing the loss, not from the financial year-end. A foreign sole shareholder who approves the accounts late by correspondence shortens the remaining time without realising it. Diary the approval date itself.

Publication is constitutive of opposability, not decoration. Article R. 223-36 of the Commercial Code provides: “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.” The decision must appear in an authorised legal gazette, the support habilité, of the department where the registered office sits, be filed at the local greffe, and be entered in the RCS, after which the BODACC carries the entry nationally. An unpublished continuation decision cannot be set up against third parties, and in practice the bank which asked for the latest Kbis will keep the file frozen until the entry appears.

The vote itself is a trap in divided companies. The Court of Cassation has held that even a shareholder who blocked the rescue keeps the dissolution weapon. In a case where a shareholder had opposed the resolution meant to regularise a company whose equity had fallen below half of its capital, then sought dissolution, the Commercial Chamber approved the lower courts. Cass. com., 31 October 2006, No. 05-13.890 holds: “la circonstance qu’un actionnaire s’est opposé à l’adoption d’une résolution destinée à permettre la régularisation de la situation d’une société anonyme dont les capitaux propres sont devenus inférieurs à la moitié de son capital, n’est pas de nature à le priver de la faculté, ouverte à tout intéressé, de demander la dissolution de la société dans les conditions de l’article L. 225-248 du code de commerce”. The circumstance that a shareholder opposed the very resolution intended to repair the situation does not deprive that shareholder of the faculty, open to any interested party, to seek dissolution under article L. 225-248. In a fifty-fifty company, this means the partner who refuses to recapitalise can later petition for dissolution, which is exactly the deadlock dynamic described in our guide to breaking a fifty-fifty deadlock from abroad. Foreign co-founders should therefore treat the four-month vote as a negotiation deadline, not a formality: either agree the cash injection, the capital reduction, or an exit, before the dissolution petition arrives.

B. File the increase from abroad at the single window and prove the cure to your bank

French company administration confirms the strategy: a capital increase is also the standard exit from the half-capital trap. The public enterprise service describes this transaction as recapitalisation, as explained on the Service Public guide to increasing company capital, verified 1 January 2024. The same page details the steps by company form, and every filing now travels through the Guichet unique des formalités des entreprises, the single window described on the INPI page for modifying a company. There is no longer a paper filing at the counter of the greffe: the EGM minutes, the updated statuts, and the certificate of publication of the legal announcement are uploaded to the single window, which routes them to the greffe for RCS entry. Check the filing receipt, then order a fresh Kbis: only that extract proves the restored capital to banks, suppliers and buyers.

One tax formality can complicate the timetable where assets rather than cash are contributed. Article 635 of the General Tax Code states: “Doivent être enregistrés dans le délai d’un mois à compter de leur date”, followed by the list of instruments concerned, including notarial deeds and instruments transferring ownership or usufruct of real property. Instruments which must be registered have to be registered within one month of their date. Where the recapitalisation includes real estate, for example the foreign parent contributes the French premises the company occupies, or where any step takes notarial form, fold that one-month registration with the tax office into the diary alongside the four-month vote and the second-financial-year cure. A contribution of ordinary movable assets or plain cash subscribed under private minutes does not trigger the same registration, but verify the point on the actual documents rather than assuming it.

Banks read these entries closely. A French bank which opened the account of a foreign-held company on the strength of the initial Kbis will ask, at the first sign of losses, for the updated Kbis, the amended statuts, and the latest approved accounts. Restored equity reopens overdrafts and investment credit; an RCS entry still showing the unresolved half-capital situation freezes them. The same logic applies in due diligence: a buyer discounts a target whose continuation decision was never published, because the dissolution risk travels with the shares. And where the company’s difficulties attract wider scrutiny, remember that thin equity is also a classic trigger for a social-security audit, as explained in our guide to facing an URSSAF audit from abroad, URSSAF being the Union de recouvrement des cotisations de sécurité sociale et d’allocations familiales, the agency collecting social contributions. Curing the balance sheet therefore protects the company on three fronts at once: corporate survival, bank credit, and audit posture.

Distance adds friction but no impossibility. Foreign identity documents and powers of attorney may need certified translation and, depending on the issuing country, an apostille; the single window accepts filings signed electronically by the authorised representative; and the legal announcement can be ordered online from any country in the gazette of the head-office department. Build a closing file as a buyer would: convening notices with proof of dispatch, powers, attendance sheet, reports, ballots or written consents, minutes, legal announcement certificate, single-window receipt, new Kbis. Where the operation runs past the second financial year without a cure, the statute leaves the door open to any interested party to petition for dissolution, as the Court of Cassation recalled above, so that file is the only shield. Keep it complete, keep it dated, keep it where the next adviser can find it.

Conclusion

A foreign owner has two clean tools and three deadly delays. The tools are the voluntary capital increase, voted by the extraordinary meeting with subscription rights respected or formally suppressed, and the recapitalisation or capital reduction which cures equity fallen below half of the capital. The delays are four months from approval of the loss-making accounts to vote on dissolution, the end of the second following financial year to restore equity, five years to complete a voted increase, and one month to register any instrument the tax code submits to registration. Respect the auditor’s independence, publish every resolution, file through the single window, and prove the result with a fresh Kbis. The signed statuts and minutes govern; only the court declares a nullity or pronounces dissolution. Run the diary from the approval date, not the year-end, and the French company survives its growth as safely as its losses.