Corporate Governance

Author:Mr Reid Feldman, Dana M. Anagnostou, Jean-Marc Desaché and Antoine Paszkiewicz
Profession:Kramer Levin Naftalis & Frankel LLP
  1. What is the typical organizational structure of a company and does the structure typically differ if the company is public or private?

    The most common forms are the following limited-liability companies:

    société anonyme ("SA") - This form, with rather rigid governance rules, is the prevalent form historically for large companies. An SA issues shares (actions) which are negotiable securities. It must have a minimum capital of €37,000 and at least two shareholders, or seven if it is publicy traded. (A variant of the SA is the European company or societas Europaea ("SE"), adopted by a few dozen companies in France.) société par actions simplifiée ("SAS") - This form, like the SA, issues shares (actions) in the form of negotiable securities, but there is great freedom in choosing governance rules. Shares of an SAS may not be publicly traded. There is no minimum capital or minimum number of shareholders. (An SAS with only one shareholder is referred to as a "société par actions simplifiée unipersonnelle" or "SASU".) société à responsabilité limitée ("SARL") - This is a traditional form for closely held companies, with a certain flexibility of governance rules. Its shares (referred to as "parts sociales") are not negotiable but may be transferred only by written contract. There is no minimum capital or minimum number of shareholders, but there is a maximum of 100. (An SARL with only one shareholder is referred to as an entreprise unipersonnelle à responsabilité limitée or "EURL".) Less frequently used forms for operating business entities are:

    limited partnership (société en commandite), with somewhat flexible governance rules, some partners/shareholders of which (commandités) have unlimited liability, the others (commanditaires) having limited liability. There are two types of such companies: société en commandite par actions ("SCA"), which issues negotiable shares (actions), and has somewhat flexible governance rules, allowing unlimited-liability partners to maintain control. A few publicly traded companies take this form; société en commandite simple ("SCS"), which issues shares in non-negotiable form ("parts sociales"). société en nom collectif ("SNC"), all partners of which have unlimited liability; société civile (which is not intended to engage in a business deemed to be "commercial"), each partner having unlimited liability for its rateable share of the company's debts; and de facto companies (sociéte en participation and...

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