Partnership and business formation laws in France.

Default partnership rules in France

In a French société en nom collectif (SNC, general partnership), profits are shared proportionally to each partner's contribution by default (Code Civil Art. 1844-1). However, the partnership agreement (contrat de société) can set any allocation the partners agree on, as long as no partner is entirely excluded from profits or losses (prohibition of clauses léonines). Partners are jointly and severally liable for partnership debts. The partnership must be registered with the Registre du Commerce et des Sociétés (RCS).

In France, profits are split proportionally to capital contributions by default. This means a partner who invested 80% of the capital would receive 80% of the profits. While this may seem more intuitive than the equal-split default in some countries, it still fails to account for non-cash contributions like time, expertise, and relationships. A written partnership agreement should address all types of contributions.

Société par Actions Simplifiée (SAS) in France

The SAS (Société par Actions Simplifiée) is the preferred entity for French startups. There is no practical minimum share capital — €1 is sufficient. Formation costs €250–€750 and takes 1–2 weeks. The SAS is uniquely flexible: the articles of association (statuts) can define governance, voting rights, transfer restrictions, and exit mechanisms almost entirely freely. A shareholders' agreement (pacte d'actionnaires) is common but the SAS statuts can incorporate many provisions that would normally go in a separate agreement. The SASU (SAS Unipersonnelle) is the single-shareholder variant.

Without a shareholders' agreement, the relationship between founders is governed by the country's default rules, which rarely account for the realities of a startup — where contributions change over time and early effort often goes uncompensated. An operating agreement or shareholders' agreement is essential. Use our equity calculator to determine a fair split based on actual contributions.

What happens when a partner leaves in France

In an SNC, a partner can withdraw according to the terms of the partnership agreement or by court order. The death of a partner may dissolve the partnership unless the agreement provides otherwise. For SAS companies, share transfers follow the restrictions in the statuts (articles), which can include pre-emption rights, approval clauses, and drag-along/tag-along provisions. Minority shareholders can petition for dissolution on just grounds (justes motifs) under Art. 1844-7 of the Code Civil.

A written agreement should address departure terms specifically, including how the buyout value is calculated, the payment timeline, vesting schedules, and any non-compete provisions. Understanding the concept of dead equity is important for managing these situations. Learn more about how dead equity affects businesses.

Marriage and business equity in France

France's default matrimonial regime is communauté réduite aux acquêts (community limited to acquisitions). Assets acquired during the marriage, including business interests, are community property. Pre-marital assets and inheritances remain separate property. Income from separate property (including business income) during the marriage becomes community property. A marriage contract (contrat de mariage) can modify this, commonly switching to séparation de biens (separate property). French courts enforce marriage contracts if notarized.

Formation and cost details

Frequently asked questions

Related resources

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• Does your small business need an equity agreement?
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• Dead equity calculator: how much is yours costing you?
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