End of business

The lifetime of a business is set in the statutes. She's from 99 years maximum. However, it may be shorter.

At the end of the term mentioned in the statutes, there are 2 possibilities:

• Either the business ends and it is dissolved by the director and the partners. They must then liquidate the business for stop activity.
• Either the associates wish to continue the activity. They have 2 options:
  
  • To convene a meeting of partners which decides on the extension of the life of the business. This meeting must be held At least 1 year before the end of the term
  • If the meeting of the partners has not been held within one year of the expiration date of the business, ask the president of the tribunal the willingness to extend (or extend) the length of the business. Any partner can make this request. If the court accepts the partner's request, it authorizes the partners to meet within 3 months to act on the extension of the business. The court may also appoint a court representative to summon the partners.

For more information, you can consult the fact sheet on the extension of business period.

Realization or extinction of the social object

THEsocial object corresponds to all the activities that the business may carry out. It is defined in the statutes when the business is constituted.

The business is dissolved in the following 2 cases:

• Realization of the social object : this means that the operation for which the business was established is definitively completed. For example, a business is set up to carry out certain work. When the work is completed, the business is dissolved.
• Extinction of the corporate object : this means that the activity for which the business was formed has become impossible. For example, a business is set up to operate a business and that business has disappeared or is being sold off.

When the corporate object is realized or has been extinguished, the business can no longer continue its activity. It is dissolved for realization or extinction of the corporate object.

The partners or shareholders must then proceed with the formalities of dissolution and liquidation business to stop the activity. They appoint an amicable liquidator to liquidate the assets of the business and arrange for the payment of creditors. The liquidator then draws up the final liquidation accounts, closes the liquidation and then carries out the cancelation formality.

Achievement of a cause provided for in the articles of association

The statutes may provide that the business will be dissolved upon the occurrence of a specified event (for example, the death of a partner or the termination of a tax regime).

In this hypothesis, the business disappears when this event occurs. The partners or shareholders must carry out the formalities of dissolution and liquidation business to stop the activity. They appoint an amicable liquidator to liquidate the assets of the business and arrange for the payment of creditors. The liquidator then draws up the final liquidation accounts, closes the liquidation and then carries out the cancelation formality.

Dissolution for “just cause”

The dissolution of a business may occur for “just reasons” at the request of a partner when the operation of the business is paralyzed. For example, it may be the non-performance of obligations by a partner or the disagreement between partners that paralyzes the operation of the business.

It is the judge who assesses on a case-by-case basis whether the situation constitutes "just cause" for dissolution.

When a partner does not fulfill his obligations, the judge may consider it to be a just reason justifying the judicial dissolution of the business:

• The partner works for a competitor.
• The partner makes an unjustified withdrawal of funds from the business' accounts.
• The shareholder does not notify the management of its decision to withdraw, contrary to the articles of association, and resumes its contributions in kind.

The disagreement between partners must lead to paralysis of the functioning of the business. It must be a real blockage, that is, the impossibility of adopting collective decisions.

The reasons for disagreement between partners are varied. These include:

• The break in the common life between two cohabiting partners who have created a SARL prevents any collective decision-making and the holding of assemblies.
• The partners are unable to obtain the majority needed to replace the board of directors who resigned several years ago.
• The partners have filed a civil suit against the managing partner for breach of trust.
• The conflict between two partners prevents the adoption of deliberations for which the statutes require unanimity.

It's the judge who appreciates on a case by case basis whether the situation constitutes a “just cause” for dissolution.

Any partner, regardless of the number of shares or units they hold in the business, can then apply to the court for dissolution for “just cause”.

The competent court depends on the type of business:

Dissolution in the case of a single shareholder

A business must always have at least 2 associates. When a partner owns all the shares, he is the sole partner of the business. This is the case, for example, when one of the two partners buys back all the shares of the other partner.

When the minimum number of partners is not respected, the situation must be regularized to avoid dissolution.

In fact, the combination of all the shares in one hand does not automatically dissolve the business. The sole shareholder has the possibility of regularize the situation in a 1 year delay. The sole shareholder may, for example, transfer shares to bring in a new shareholder.

If, at the end of a period of 1 year, the partner is still alone, any interested party (e.g. creditor) may request dissolution at the court where the business has its registered office. The commercial court is competent for a commercial business and the judicial court for a civil business.

The court may then grant the business a maximum period of 6 months to regularize his situation.

Dissolution in case of judgment ordering the closure of the bankruptcy

A business in financial difficulty may request the opening of a collective procedure. When the judicial recovery is not possible (because the business is too indebted), a procedure of bankruptcy is opened by the court.

At the time of closing judgment from the court's judicial liquidation, the business disappears. It is therefore automatically dissolved.

Dissolution following a criminal sanction

Where a business is convicted of certain offenses, the court may order the dissolution of the business as a penalty.

The offenses concerned include:

• Scam or attempted fraud
• Abuse of trust
• Abuse of weaknessetc.

The commercial business is then sent back to the commercial court to organize its liquidation. In the case of a civil business, the court has jurisdiction.

Dissolution when equity is less than half the share capital

If, as a result of losses recognized in the accounting records, equity become less than half of the share capital, the business must comply with a specific procedure.

The director must call the partners within 4 months from the date of the meeting of approval of the accounts. They will decide to continue the activity of the business or dissolve. The decision taken shall be published in a support for legal announcements and declared on the website of the company formalities desk.

When the partners decide to continue activity, they have a period of 2 years to replenish the business’s own funds (this period may be increased by a further 2 years). If reconstitution does not take place, any interested party (e.g. a competitor, a partner) may apply to the commercial court for the dissolution of the business.

When the partners decide to dissolvethe business, they must carry out the formalities of dissolution and liquidation business to stop the activity. They appoint an amicable liquidator to liquidate the assets of the business and arrange for the payment of creditors. The liquidator then draws up the final liquidation accounts, closes the liquidation and then carries out the cancelation formality.

For more information on the procedure, please refer to the fact sheet on the loss of half of equity.

1. Hold a meeting to decide on the dissolution and appointment of the liquidator

From the moment of its dissolution, the business is in liquidation.

It must hold a general meeting to declare the company dissolved and name an amicable liquidator.

For persons outside the businesses (such as creditors), the dissolution takes effect only from the date of the RCS: titleContent and at RNE: titleContent.

The amicable liquidator shall be appointed in accordance with the provisions laid down in the statutes. It may be the business manager, a partner (a natural person or a business) or a person outside the business.

During his term, the amicable liquidator represents the business in respect of third party. It has the following missions:

• Sell company-owned real and personal property
• Pay the creditors
• Allocate the available balance, if any, among the partners according to their respective contributions

Within 3 months of the end of the financial year, it draws up the annual accounts and a written report in which it reports on the liquidation operations.

2. Publish a legal announcement of dissolution

The decision of the meeting to dissolve the business with the appointment of the liquidator is published in the delay of 1 month in a support authorized to receive legal announcements in the department of the business' headquarters.

Search for media authorized to publish legal ads by department

3. Submit an amending formality file

In a period of 1 month from the date of the decision to dissolve, the amicable liquidator must prepare a file containing the following documents:

• Minutes of the meeting that decides on the dissolution with the appointment of the liquidator

• Certificate of publication of the dissolution decision in a support for legal announcements
• Declaration on the honor of non-conviction and filiation (surname and first names of father and mother) of the liquidator
• Duplex copy of the valid national identity card of the liquidator

The business dissolution formality file is done at the company formalities desk.

Window of company formalities

4. Hold a meeting deciding on the closure of the amicable liquidation

At the end of the liquidation, the amicable liquidator convenes ordinary general meeting the partners to decide on the following:

• Final accounts at the end of the liquidation
• Discharge of the liquidator's management and discharge of his mandate
• Closure of the liquidation.

5. Publish a liquidation close-out announcement

The amicable liquidator must publish a notice of closing of liquidation in a support authorized to receive legal announcements in the department of the headquarters of the business within 1 month.

Search for media authorized to publish legal ads by department

6. Submitting a de-listing dossier

In the delay of 1 month as from the publication of the closing of the liquidation, the amicable liquidator requests the cancelation of the business at the company formalities desk.

Window of company formalities

The following documents must be provided for the cancelation of the business:

• Decision of the General Meeting deciding on the final liquidation accounts
• Act establishing the closure of operations certified by the amicable liquidator
• Certificate of publication in a support authorized to publish legal ads
• Tax certificate (or attestation of tax regularity) that proves that the business is in compliance with its tax obligations and has paid what it owes. The tax certificate can be obtained from the company Tax Office (SIE) to which the company depends
• Certificate of social regularity (or attestation of vigilance) in the case of employees who prove that the business is up to date with its social declarations. This certificate can be obtained directly online on the Urssaf website. When the company has no employees, you must request a certificate of company without an employee.

When all these documents are provided, the business is then struck off the RCS: titleContent and the RNE: titleContent.