Setting up a joint venture in France is relatively easy. Joint ventures with a commercial activity are subject to the same tax and VAT rules as a general partnership but the type of legal structure chosen has important business consequences. There are several legal entities and type of corporate structure to choose from, ranging from establishing a joint-owned company (SAS), an economic interest grouping (GIE or EEIG,), a simple or limited partnership (SNC or SCS,) or a form of unregistered company contract called a société en participation.
The société en participation is the most common corporate structure used for a joint venture. While it can be fully operational, organised around the priorities of the joint venture partners, it is not registered with the commercial authorities and therefore the partners are not covered by the limited liability status of a true company. The société en participation is most useful when the joint venture partners believe their mutual business goals can be accomplished quickly as in the case of a single transaction. It has the added characteristic of being opaque – third parties cannot identify the joint venture partners.
An increasingly popular form of joint venture is through the creation of an SAS (société par actions simplifiée), or simplified stock company. While the SAS has similarities with the typical SA (like a plc in the UK), it is more flexible. Shareholders establish the articles of association and internal organisation of the SAS. The only mandatory requirement is that the SAS shareholders must elect a president who will represent the SAS vis-à-vis third parties. As such, the president could be the sole officer of a French SAS and perform all managerial acts necessary for its business.
Setting up a Joint Venture in France