How to dissolve a company in France

Deciding to end your business can be either a difficult or freeing landmark in your career, but not only can it be an emotional decision, it can also come with a whole raft of paperwork to complete and administrative hoops to jump through which can make a big change even more daunting.

The dissolution of a company in France is often poorly understood by entrepreneurs and startups. After all, when we set up a business, we are so full of excitement and future possibilities that we don’t want to imagine failure or endings and don’t want to jinx our fledgling enterprise. But asking ourselves: “What is the procedure if I want to end this business?” is actually a very sensible question.

A dissolution or the dissolving of a company is in fact the first step to definitively stopping a company’s activity. A company cannot be deregistered without first being dissolved. A company must cease its activity when the dissolution is pronounced, and to do that you have to follow a very specific procedure.

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Manuel Nadaud, a lawyer at the Paris law firm Wilegal, answered our questions on the ins and outs of dissolving a company in France and on the various pitfalls to avoid.

Euro Start: Why do most people decide to dissolve a company?

Manuel Nadaud: It depends on the situation. Most of the time, the dissolution is simply the decision of the shareholders to end the life of the company for financial reasons and also non-economic ones such as change of activity, end of a project, separation of partners, retirement etc. The company partners can decide on the various scenarios which they want to declare in the “articles of association” of the company. There are also many cases which are regulated by French laws.

Who can decide to dissolve a company?

The answer is quite simple: either the partners or the courts which rule at the request of one or more partners, a legal representative, a creditor or the public prosecutor. If this is a decision of the shareholders, it is an early dissolution. It is therefore a voluntary decision of the partners. If the decision comes from the courts, most of the time it is a judicial liquidation.

How does the dissolution procedure work?

The procedure again depends on the situation in which you find yourself. In general, the procedure is as follows:
• The partners decide on the end of the company and therefore on an amicable liquidation procedure
• The partners appoint a liquidator who can be one of the managers of the company or a third party
• A legal formality must be respected as well as the publication of a legal notice and a deposit at the clerk of the competent commercial court

What happens during dissolution?

During this period, the liquidator who has been appointed by the partners (during an amicable liquidation) has several tasks to perform:
• Take care of liquidating assets, collect bad debts and pay debts;
• Establish final liquidation accounts, normally with the help of the chartered accountant;
• Have the partners approve the liquidation accounts.

Following the dissolution, when should the liquidation take place?

Within three years. For the simple reason that the mandate of the liquidator cannot last more than three years (although there may be extensions under certain rather strict conditions). So, the time between dissolution and liquidation cannot exceed three years. On the other hand, it should be understood that other deadlines come into play during this period of time: deadlines for legal publications, notices of associates etc. It is important, when the liquidation is complex, to be advised by a specialist.

Does dissolution mean the end of the life of the company?

Absolutely not. We must not confuse dissolution, liquidation and strike-off. A company only ends when the liquidation operations are closed. So, after the decision to dissolve. As indicated, the liquidator must carry out liquidation operations (sales of assets, collection of debts, etc). The company is therefore still alive and the legal entity continues to exist.

Then, when does the company close?

After the strike-off which is the last formality that the liquidator must carry out. This is a specific process and the last decision of the partners. The legal entity ceases to exist when the cancellation formality is accepted by the Clerk of the Trade and Companies Register and when the notification to BODACC (which is an official publication) is published.

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For more information on all forms of corporate legal services including dissolutions, liquidations and deregistration, Euro Start Entreprises and Wilegal have partnered up to help you, so please contact us on 0033 (0) 1 53 57 49 10 or email us from our contact page and we'll be happy to discuss your requirements.

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