The French law 2019-744 of July 19, 2019 (Soilihi Law) eliminated the requirement for simplified joint stock companies (SAS) to assess contributions in the form of services or know-how (apports en industrie) and, in some cases, the requirement to assess special benefits that certain shareholders made be entitled to. These streamlined rules are in line with reforms which already applied to contributions in kind.
1. Elimination of the requirement to assess contributions in the form of services or know-how made to an SAS
The partners of an SAS have the option of making contributions in the form of services or know-how (contributions of their work or technical knowledge, for example) at the time the company is incorporated or during the course of its lifecycle.
Article L. 227-1 paragraph 4 of the French Commercial Code provided for the requirement to have any contributions in the form of services or know-how assessed a posteriori by a statutory auditor. The by-laws should specify the time frame within which such assessment should be carried out.
This requirement was eliminated as of July 21, 2019.
The shareholders of an SAS are no longer required to have their contributions in the form of services or know-how assessed, either at the time of incorporation or over the course of the company’s lifecycle.
The SAS’s by-laws will need to be modified to take into account this reform.
2. Elimination of the requirement to have special benefits, which certain shareholders may be entitled to, assessed at the time the SAS is incorporated
The shareholders of an SAS have the right, at the time of incorporation or during the company’s lifecycle, to be entitled to special benefits or preference shares.
Until now, such benefits were to be assessed by a statutory auditor, pursuant to reference to the regime applicable to limited liability companies (sociétés anonymes).
The shareholders of an SAS are no longer required to have special benefits, which they may be entitled to, assessed at the time the company is incorporated. However, such an assessment is still mandatory if a shareholder becomes entitled to a special benefit during the course of a company’s lifecycle.
3. A reminder of the rules governing contributions in kind made to an SAS
Prior to the Soilihi Law, legislators had already introduced measures to simplify the assessment of contributions in kind made to an SAS.
When forming an SAS, the founders may unanimously decide not to use a statutory auditor if the unit value of the contributions in kind does not exceed 30,000 euros and if the value of all the contributions in kind, not subject to assessment, does not exceed half of the company’s share capital (article L. 227-1 paragraph 5 of the French Commercial Code).
However, this exemption does not apply in the event of a contribution in kind made during the company’s lifecycle.
