End a business in such a way as to avoid legal proceedings requires compliance with certain requirements. These requirements are directly related to the financial situation of the company and to steps to follow to close it.
Foundation-company-ricard provides you with a file to inform you about the different criteria to observe to close a business amicably.
State of cessation of payments: companies do not have to be subject to it to close amicably
This is a compulsory driving for an amicable closure. The company must not be unable to repay its debts. It must be able to pay them with its assets.
According to the legislation, it is important that the company meets its debts with its assets. The concept of cessation of payments is defined by the French Commercial Code:
The “debtor […] unable to meet the liabilities due with its available assets is in cessation of payments”.
Available assets are items that can be mobilized in the short term. Current liabilities correspond to current debts that must be repaid immediately. Here is what the broader notions of assets and liabilities represent:
| Notion | Balance sheet items |
| Active | Fixed assets (long-term investments), inventories (goods, work in progress, etc.), trade receivables and cash (bank accounts and cash in hand) |
| Passive | Supplier debts, tax debts, social debts, loans from credit institutions, bank overdrafts... |
If the state of suspension of payments is out, business closure can not be done amicably. The company must file for bankruptcy and apply for judicial liquidation, simplified if necessary, to the commercial court (if it exercises a commercial or craft activity). In other cases, it is the tribunal de grande instance which deals with the request.
Partners must make a regulatory decision to amicably close their business
Only thelegal body having the skills adequate can close a business. Moreover, he must stick to formal requirements. First, he must decide on a voluntary early dissolution Company.
Therefore, the company enters a transitional period called the “liquidation period”. During this phase, the liquidator will sell inventory, part with fixed assets and collect receivables. With the funds he has collected, he will reimburse the creditors, that is to say, pay all the debts of the company.
Once completed, the liquidator draws up closing accounts. Finally, he must collect the organ who appointed him to decide on the end of the liquidation operations. The body will have to approve the accounts, release it from its functions, distribute the liquidation bonus (or record a deficit) and put an end to the liquidation operations.
Here are the competent legal bodies depending on the legal form of the company:
| Legal status | Body authorized to decide on an amicable closure | Formal requirements |
| Single-person simplified joint-stock company – SASU | Sole shareholder | Minutes of decision of the sole shareholder |
| Simplified joint stock company – SAS | Shareholders (group of partners) | Extraordinary and ordinary general meeting minutes |
| Sole proprietorship with limited liability – EURL | Sole shareholder | Minutes of decision of the sole shareholder |
| Limited Liability Company – SARL | Community of partners | Extraordinary and ordinary general meeting minutes |
During the closing process, the company is required to meet many obligations legal. This includes, among other things, publishing legal announcements of closure and to compile and submit files to the competent body. Once the process is completed, the company must request its removal from official registers.
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For more information on closing a business:
