What are the main motivations for partners to convert their limited liability company (SARL) into a simplified joint stock company (SAS)?
- The number of associates is unlimited within the framework of a SAS whereas it is capped at 100 for the SARL;
- The SAS organizational rules in the statutes are more flexible than those of an LLC;
- The Chairman of the SAS benefits from the employee plan whereas only the minority managers of the LLC can benefit from it;
- The transfer of shares is in principle free within the framework of a SAS whereas the partners’ agreement is compulsory for this type of decision in the LLC. This has the effect of attracting more investors;
- The SAS allows the issuance of preferred shares, with or without the right to vote, in order to flexibly adjust the voting rights of shareholders;
- At the tax level, in the event of transfer of shares by a SAS partner, the registration fees on the purchase amount are lower than in the case of SARL.
There are no real conditions to carry out the transformation of the SARL into SAS, except that the amount of equity of the LLC must be at least equal to the amount of the share capital.
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What procedure to follow to transform an LLC into a SAS?
- How to perform the transformation?
The transformation decision taken at extraordinary general meeting (AGE). It is necessary to obtain the unanimity of the partners for this type of decision. The decision is established by a report which will then be filed with the registry.
Much of the transformation work relies on the modification of the company’s statutes. Indeed, it is necessary for you to change the legal form of the company, to replace the terms of the statutes devoted to the LLC (“management”, “SARL”, “shares”) by the terms related to the SAS (“presidency “,” SAS “,” actions “), to modify the rules related to decision-making in shareholders’ meetings or to modify the article on the conditions linked to the appointment of an auditor.
- Advertising formalities
After having recorded the PV of AGE with the tax revenue (and pay the registration fees), publication of the notice including changes made to a legal notice log is required. The transformation file is filed with the commercial court registry by the directors (or the representative) in order to obtain validation. The necessary documents are: the certified true copy of the AGE report relating to the transformation decision and the updated articles of association, three forms Cerfa M2completed, a copy of the report of the transformation commissioner, the publication copy of the transformation of the company in the legal notice journal.
- The intervention of a transformation auditor
The transformation decision must be preceded by a report from a transformation commissionerThe latter draws up a report on the situation of the company and the valuation of its assets. Its report must be filed with the clerk of the commercial court at least 8 days before the assembly meeting scheduled to rule on the transformation of the company. In the case where the SARL already has an auditor, it is not necessary to file its report with the clerk of the commercial court, that of the transformation commissioner is sufficient.
What are the effects of the transformation?
The “President” of the SAS will be considered “Assimilated employee” and affiliated to the general social security scheme.
At the legal level, the Substitution of SAS for SARL does not represent the creation of a new company. The contracts that were in progress continue and third parties retain the same rights and obligations towards the company after the transformation.
On the fiscal level, the SAS tax regime is the same as that of the transformed SARL. The transformation of an LLC into a SAS is fiscally neutral. The transfer of “shares” to third parties is free while the transfer of the “shares” of the LLC required the consent of the partners.
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