Reduction of the Minimum Number of Shareholders in French Private Stock Companies From Seven to Two

September 16, 2015

By Sébastien Crepy & Ted Dimvula

In order to ensure that all the French corporate entities are in line with the day-to-day practice, the French government has decided to reform the French private stock companies (sociétés anonyme non cotées). As a consequence, the Ordinance regarding the reduction of the minimum number of shareholders in private stock companies (Ordonnance n°2015-1127 du 10 septembre 2015 portant réduction du nombre minimal d’actionnaires dans les sociétés anonymes non cotées) was adopted by the French Government on September 10, 2015. This measure has been taken in the context of the simplification of the day-to-day operations of the French companies.

Thus, Article 1 of this Ordinance amends Article L. 225-1 of the French Commercial Code providing that the minimum number of shareholders is now at least of two (2) for the incorporation of a French private stock company (société anonyme non cotée). Nevertheless, the minimum number of seven (7) shareholders is maintained for the French stock companies whose securities are admitted to trading on a regulated market (sociétés anonymes cotées).

This amendment represents a little but significant change in French Corporations Law. In fact, it aims, on the one hand, to enhance the attraction of French sociétés anonymes, in particular for small and medium enterprises (SMEs) and family-owned companies, by allowing them to use shareholding of convenience. In the other hand, it is intended for increasing the competitiveness of France which remained the only European country maintaining the seven shareholders rule.

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