Investors or partners of a Company can temporarily cease activity. This cessation may result in the put to sleep of the company, the consequences of which differ from those of a dissolution / liquidation. Indeed, the dormancy does not lead to the disappearance of society, but rather an intermediate state. Foundation-company-ricard reveals to you theinterest to shut down a company, method to follow to do so and the consequences on his operation.
Why suspend your business?
Suspend a business lets not to to see her disappear legal databases. This method is only advantageous if the partners have the ambition to revive their company at some point. Indeed, the structure no longer generates income but still exists legally. This is an “empty envelope”.
The suspension is therefore of interest because it makes it possible to avoid a removal from the trade and companies register. This makes it possible to reuse the structure for other projects or to relaunch it for a resumption of activity.
In most cases, suspension is used for start-ups or end-of-life companies:
- In the first case, it offers the partners the possibility of creating an operational company while avoiding delays linked to registration.
- In the second case, it is used to have a business recovery plan (project set aside to devote to another activity).
A suspension should not to hide of financial problems and in particular a state of cessation of payments.
How do I temporarily suspend a business?
La decision making de shut down a business usually reports to the manager. The law does not require the partners to meet in a general meeting to take a collective decision. However, the articles of association may provide for such an obligation. In any case, it is advisable toget the deal partners to limit the responsibilities of the manager.
| Legal status | Decision-making body |
| SASU | President (approval of the sole shareholder) |
| EURL | Manager (approval of the sole shareholder) |
| SARL | Manager (approval of the sole shareholder) |
| SAS | Legal representative (approval of the sole shareholder) |
Once the decision is made, some legal formalities must be carried out. The representative of the company must complete an application form for amending registration in the trade and companies register (M2) and pass it:
- At the business formalities center (CFE),
- Or to Registry of the Commercial Court.
This organization will modify the information of the company appearing in the RCS and add a mention. A legal announcement is not necessary.
A Company cannot be in a state of sleep for more than two years from the date of the amended registration. As the deadline approaches, the manager must make the decision to resume the activity (and therefore to end the dormant state) or to dissolve the company. If he does not act within the time limits, the commercial court may pronounce the ex officio striking off of the society. A specific procedure then applies.
Results of a hibernation on the functioning of society?
A dormant business is inactive. She has no work to do but continues to exist. It is therefore bound by a certain number of homework which are presented in the following table:
| Domain | Scope of obligations |
| Accounting | Obligations similar to those imposed on active companies (bookkeeping, preparation of annual accounts, etc.) Possibility for micro-enterprises (in the economic sense) to present statements in a simplified form |
| Tax | Loss of VAT liability status (the company no longer has a declaration to submit) Absence of payment of CFE/CVAE if no activity is exercised on 1 January Filing of mandatory annual results declarations (to “nil” if necessary) |
| Legal | No reduction of obligations: the manager must always call the partner(s) to approve the annual accounts Mandatory filing of corporate accounts |
| Social | Payment of minimum flat-rate social security contributions (non-salaried managers only) |
Also to be discovered on the subject of the closure of the company:
- What is the follow-up to be given to a company without activity? ?
- What is the cost of closing a business ?
- How dissolve et liquidate a company ?
- What are the steps to take to deregister your company? ?
Why shut down a company?
Answer: Putting a company on hold can be a strategic choice for a company that wishes to temporarily suspend its activities without permanently ceasing them. This can save the company time and money by avoiding administrative and tax costs and obligations.
How to shut down your company?
Answer: To put a company on hold, you must first apply to the tax authorities for a certificate of putting it on hold. Once this certificate is obtained, you must suspend all commercial and administrative activities of the company and inform the stakeholders. You will then have to update the accounting records and take stock of the company's tax and legal obligations.
What is the maximum sleep time?
Answer: The maximum sleeping time depends on the legislation of each country. In France, a company can be put on hold for a maximum period of 5 years.
