The SARL: Characteristics, Advantages and Operation
The Société à Responsabilité Limitée (SARL) is one of the most popular legal forms in France.
Management of SARL
The SARL is managed by a manager, who may be the sole manager or one of a group of managers.
Manager’s powers:
He represents the company in dealings with third parties.
Its powers may be limited in the Articles of Association, but these limitations are not enforceable against third parties.
The manager may be a partner or a third party.
Shareholders’ meetings in a SARL
Major decisions are taken at the Annual General Meeting (ordinary or extraordinary):
Notice of meeting: by registered letter, at least 15 days before the meeting.
Voting procedures:
Ordinary General Meeting: absolute or relative majority, depending on the consultation.
Extraordinary General Meeting: reinforced quorum and majority (e.g. two-thirds of shares).
Certain decisions, such as converting to a simplified joint stock company (SAS) or changing the company’s nationality, require unanimous approval by the shareholders.
Partners and their rights in a SARL
A SARL can be formed by a single partner (EURL) or up to 100 partners.
Associates receive shares in proportion to their contributions, giving them :
Financial rights: dividends, liquidation surplus.
Political rights: right to vote in assemblies.
Information rights: access to company documents and the right to ask questions or take legal action.
Partners are liable for the company’s liabilities up to the amount of their contributions.
The SARL’s corporate purpose
SARLs may engage in a wide variety of activities, provided they are lawful and possible. However, certain activities are prohibited, including :
Insurance, capitalization and savings.
Medical biology laboratories.
Some regulated professions, such as tobacconists, are also reserved for other types of company (e.g. SNC).
SARL share capital
The amount of capital is freely determined in the articles of association, with no minimum requirement.
A SARL can also have variable capital.
Contributions may be in cash, kind or industry (the latter do not contribute to the share capital).
The appointment of a contribution auditor is not required if :
None of the assets contributed exceeds €30,000.
Contributions in kind represent less than 50% of capital.
Advantages of the SARL
- Legal framework: The strict legal framework protects associates and prevents abuse, unlike the SAS, which offers greater freedom but less supervision.
- Limited liability: associates are only liable up to the amount of their contributions.
- Flexibility for small structures: The SARL is ideal for family projects or small businesses.
- Ease of transfer: The transfer of shares can be governed by clauses in the articles of association.
Disadvantages of the SARL
- Rigidity of bylaws: The legal rules governing the SARL may limit its flexibility compared with the SAS.
- Set-up formalities: Creating an SARL requires the drafting of detailed articles of association and the completion of costly and complex legal formalities.
- Social security contributions: Managing directors are considered as non-salaried workers (TNS), with social security contributions often less advantageous than those of assimilated employees.
- Limited to 100 partners: The SARL is less suited to projects requiring a large shareholder base.
Articles of association
Drafting the articles of association is a key step, including :
- Company name, corporate purpose and registered office.
- The amount of share capital and its breakdown.
- Operating rules: management, general meetings, profit distribution, etc.
Registration formalities
To set up an SARL, the founders must file a dossier with the CFE (Centre de formalités des entreprises), which includes :
- Bylaws signed.
- Certificate of deposit.
- A certificate of publication in a legal gazette.
- Supporting documents (identity of managers, occupancy of premises, etc.).
Why choose a SARL?
The SARL is particularly well suited to small and medium-sized businesses, thanks to its strict legal framework and the protection offered to associates. It is ideal for projects requiring a robust, secure structure, while offering tax and social security benefits tailored to small structures.
To set up your SARL, contact our experts or use our online tools to simplify the process.
See also
Choice of legal form
Comment choisir son statut juridique ?Advantages and disadvantages of SAS
Avantages et Inconvénients de la SAS
Take the plunge and start your own business!
Contact us today to find out how COREXX can help you with your choice of legal form.