Company conversion lawyer in Paris: from SARL to SAS, or new governance.

The most frequent reasons: opening the capital to an investor who requires preference shares, granting BSPCE founder share warrants to the first employees, simplifying governance through a single chairman, and moving the director to the employee-equivalent social security regime. The SAS offers considerable flexibility in its articles, as set out in Article L. 227-1 of the French Commercial Code (Code de commerce). It makes fundraising easier, whereas the SARL imposes more rigid rules on share transfers.

Article L. 227-3 of the French Commercial Code requires the unanimity of the shareholders. No provision of the articles can derogate from it. Any shareholder, even a minority one, can block the conversion. This rule protects the shareholder who wishes to keep the SARL regime, for example a majority manager under the self-employed regime. For conversion into an SA, the majority required to amend the articles is sufficient (Article L. 223-43).

Yes, for any conversion into a company limited by shares (SAS, SA). If the company has a registered statutory auditor, the auditor prepares the report on the company's position and the value of its assets. Otherwise, a conversion auditor is appointed, either unanimously by the shareholders or by court decision at the request of the company's officers, under Article L. 224-3 of the French Commercial Code (Code de commerce). The shareholders' express approval of the valuation is mandatory on pain of nullity (Cass. com., 19 June 2024, No. 22-19.624).

On top of the legal notice and court registry fees (about €250 to €400), fees vary with complexity: audit, appointment of the conversion auditor, negotiation with a minority shareholder, updating of sensitive contracts. A standard SARL-to-SAS conversion is priced from €4,500 incl. VAT. Cases involving a challenge, court intervention or a family office start from €8,000 incl. VAT.

Allow two to three months between the decision and effective registration. The timetable covers the preliminary audit, appointment of the auditor, drafting of the new articles of association, works council (CSE) consultation where applicable, the extraordinary general meeting, the INPI filing and BODACC publication. Any haste exposes the conversion to a procedural defect.

The principle is that the term of office ends. The manager of an SARL does not automatically become chairman of the SAS resulting from the conversion. The appointment of the new director must appear expressly in the conversion decision or in a simultaneous decision. Otherwise, the company is left without a legal representative between the date the conversion takes effect and the appointment, a situation to be avoided.

The principle is the continuity of the legal entity under Article 1844-3 of the French Civil Code (Code civil). Contracts continue automatically. But this continuity has exceptions: intuitu personae clauses (commercial lease, distribution agreements), regulated approvals, financing with covenants, and administrative authorisations tied to the company form. Each sensitive contract must be audited and, if necessary, renegotiated.

Employment contracts continue without interruption: no dismissal and no need for an amendment. The collective status (collective agreement, company agreements) is in principle maintained. However, the works council (CSE) must be consulted beforehand if headcount exceeds the thresholds. A late or forgotten consultation weakens the conversion and exposes the company to separate litigation.

A conversion between forms subject to corporate income tax is in principle tax-neutral. It does not create a new legal entity and does not entail a cessation of business. However, where it comes with a change of tax regime (from corporate income tax to income tax, or the end of an income tax option), it is treated as a cessation, with immediate taxation of profits and unrealised capital gains. A simulation is essential beforehand.

If the conversion requires unanimity (as for a switch to an SAS), the refusal of a single shareholder blocks the operation. If the blockage is manifestly contrary to the company's interest and without legitimate reason, it may be characterised as abuse of minority rights. The judge may then take the company's interest into account otherwise than by simply awarding damages (Cass. com., 14 January 1992, No. 90-13.055, the Vitama case, concerning a capital increase). Proving the abuse remains demanding.

Creditors' specific right of opposition exists mainly for mergers (Article L. 236-15 of the French Commercial Code). In a simple conversion, creditors keep their rights against the converted company and may rely on unenforceability or fraud if the conversion was meant to arrange the company's insolvency. The continuity of the legal entity works in their favour (Article 1844-3 of the French Civil Code).

No, the company name can be kept. The company form must, however, appear on all official documents (letterhead, invoices, the website's legal notices, contracts). An SARL that has become an SAS can no longer present itself as an SARL, on pain of a false statement. Updating commercial materials should accompany the conversion.

The share capital is in principle maintained. For a conversion into an SA, the capital must be at least €37,000 (Article L. 224-2 of the French Commercial Code). If the capital is lower, a prior increase is mandatory. Shareholders' equity must also be at least equal to the share capital, failing which the conversion may be blocked.

The main risks: lack of unanimity where the target form requires it, failure to approve the valuation of the assets expressly (Cass. com., 19 June 2024, No. 22-19.624), breach of the rules on calling the meeting, and an increase in a shareholder's commitments without their consent (Article 1836, paragraph 2, of the French Civil Code, sanctioned by absolute nullity according to Cass. com., 13 November 2003, No. 00-20.646). The limitation period for an action in nullity is two years (Article 1844-14 of the French Civil Code).

Disputes between shareholders and those relating to the running of the company fall within the jurisdiction of the commercial court of the registered office, that is, the Paris commercial court for a company registered in the capital. The articles may provide for an arbitration clause that will displace this jurisdiction. The firm regularly pleads before this court.