Company Constitution: Legal Definition and Practical Case Analysis

Extract

[...] However, depending on the regime chosen, the consequences can be different in the event of company constitution, particularly from the point of view of the consequences in the event of financial difficulties of the company. Under the separation regime, there is a division between the assets of each partner linked by the civil partnership, and therefore, in the event of company constitution, only the person with the quality of associate receives shares. The other person can then claim nothing in relation to the company and has no rights over it. [...]

[...] Constitution of a company PRACTICAL CASE In the case at hand, Mr. PLUME is an entrepreneur at the head of an industrial company in the sector of machine tool manufacturing for over 10 years, wishes to hire several employees and make significant investments. His turnover being constantly increasing, particularly thanks to the help of his wife, the entrepreneur aspires to significantly evolve his field of activity. That is why he is considering the constitution of a company in which he could develop new procedures, elaborated by Mr. [...]

[...] The two associates will therefore have to weigh the advantages and disadvantages of the different legal regimes to set up their company, including the consequences on their patrimonial situation. It is finally necessary to revisit the personal situation of the two associates involved in this constitution. In particular, Mr. FEUILLE is in a civil partnership with his wife. If, in principle, people who enter into a civil partnership opt for the separation of their assets, some opt for the regime of indivision. [...]

[...] PLUME wants to contribute an immovable property to the company; it is a contribution in ownership and not a simple usufruct contribution. - In addition, the sharing of profits, in exchange for the contributions. Each associate thus receives shares or stocks that give him the right to participate in the exploitation result. - Finally, the affectio societatis. Each company contract must express the desire of at least two people who voluntarily associate themselves with a common objective and project. The associates are thus bound by an 'affectio societatis'. [...]

[...] The constitution of a company also refers to the legal act by which a company is created. It is indeed a constitution contract or 'society contract', as stated by Article 1832 of the aforementioned Civil Code, which must bind the associates among themselves. Therefore, there are several modalities in the constitution of the company. As has been recalled, the company contract is the contract that establishes the company. This must be formalized in the statutes, the drafting of which is the very first step in the constitution of a company. [...]