Once a year, At the Annual General Meeting (AGM), the shareholders of a company are required to meet in order to’approve the parent company financial statements of the past year.
Who is affected?
All businesses incorporated as companies are required to approve the company's annual financial statements and decide on the appropriation of profits. The deadlines and procedures vary according to the legal form of the company.
What are the deadlines for holding General Meetings?
For SARLs (Société à responsabilité limitée) and EURLs (Entreprise unipersonnelle à responsabilité limitée), the terms and conditions are set out in the French Commercial Code.
The General Meeting must be held within 6 months of closing of the last financial year. In most cases, the financial year corresponds to the calendar year. The General Meeting should therefore be held no later than 30 June to approve the accounts closed on 31 December of the previous year. However, companies may choose to close their accounts on another date. For example, companies in the winter leisure sector rarely close their accounts at the end of the calendar year because activity is too intense at that time of year. These companies generally close their accounts on 30 June. They must therefore hold their AGOA by 31 December of the same year at the latest.
In the case of a simplified joint stock company (SAS), the Articles of Association are free to determine how the shareholders are to be convened.
All these terms and conditions are set out in the company's Articles of Association. These should be referred to to ensure that the various obligations are met.
What documents do I need to present to the shareholders?
The documents to be sent or made available to shareholders vary according to the legal form and size of the company.
For the vast majority of companies, the documents to be drawn up are
- The inventory
- Annual accounts
Larger companies are also obliged to draw up annual reports. forecast documents and a management report. Companies with a statutory auditor must attach the statutory auditor's report and the special report on regulated agreements. Companies subject to the obligation to draw up consolidated accounts must also send the consolidated financial statements.
It goes without saying that in companies where there is a sole shareholder, the manager will give the mandatory documents to the sole shareholder only when the shareholder is not the manager.
Various documents need to be drawn up for General Meetings (notices of meeting, attendance sheets, draft resolutions, etc.). Compliance with the formalities required by law and the company's Articles of Association is imperative if General Meetings are to be valid. Decisions taken in breach of the rules may be overturned at the request of any interested party.
What decisions are taken at the Meeting?
At the Ordinary Annual General Meeting, shareholders must vote on the’approval of the inventory, annual accounts and other mandatory documents depending on the structure. They must also decide on the appropriation of net income. If the company makes a profit, it may be decided to distribute a portion of the profits to the shareholders in the form of dividends.
Other matters may be dealt with at the Meeting insofar as they fall within the remit of the Ordinary Meeting. If there are plans to amend the Articles of Association, a Combined General Meeting will have to be held to deal with matters that fall within the remit of the Extraordinary General Meeting.
In the case of a simplified joint stock company (SAS), reference should be made to the Articles of Association for the organisation of the General Meeting.
What are the majority requirements?
In SARLs, decisions at Ordinary General Meetings are taken by majority vote. absolute majority. In other words, for a decision to be taken, one or more shareholders representing more than half of the shares must vote in favour.
If this majority is not obtained, a 2nd consultation is scheduled. Decisions are taken by relative majority, In other words, if the majority of voters vote in favour.
The Articles of Association may not provide for a 2nd consultation.
For EURLs, the filing of the inventory and the annual accounts with the registry constitutes implicit approval of the accounts.
In the case of SASs, the majority conditions are freely set out in the Articles of Association.
What are the formalities for filing and publishing accounts?
For EURLs, SARLs and SASs, accounting documents must be filed each year with the commercial court registry.
The following documents must be submitted:
- the annual accounts
- the auditor's report, if applicable
- the proposed appropriation of net profit and the resolution
- the consolidated financial statements, the Group management report and the statutory auditor's report on the consolidated financial statements, where applicable.
What are the penalties?
Failure to file annual accounts is punishable by a fine of €1,500 and €3,000 if the offence is repeated..
Novalliance Avocats carries out all the formalities involved in holding General Meetings and filing with the commercial court registry on your behalf.
