While France’s SAS company form dominates headlines, the classic SARL remains vital. In 2024, more than two million SARLs backed small businesses, family firms, and traditional sectors.
France is the second-largest economic power in the European Union. Anyone looking to do business in the European single market – or simply wanting to understand how major EU economies function – cannot ignore the country’s corporate structures. Recently, much attention has been focused on the SAS, or Société par actions simplifiée, a flexible and modern company form that is most comparable to the UK’s private company limited by shares. But while the SAS is in the spotlight, it’s worth taking a closer look at a true classic: the SARL, the French equivalent of the UK’s Limited Liability Company (Ltd).
In 2024, more than two million SARLs were active in France. Behind this figure lies a remarkable reality: the SARL remains one of the most solid foundations of the French economy. Less glamorous in the media but incredibly widespread, it is a quiet cornerstone of the country’s economic landscape – especially in traditional sectors, among small and medium-sized enterprises (SMEs), and in family-run businesses.
Unpacking the enduring relevance of a classic company structure.
What is an SARL?
The SARL is a form of commercial company with between 2 and 100 shareholders. It is based on a freely determined – often modest – share capital, with shares distributed among the partners and liability limited to the amount of their contributions.
It is subject to a strict but protective legal framework, and its operation is governed by the Commercial Code. This formalism, which is sometimes seen as an obstacle, also provides legal certainty for the partners.
There is also a one-person version, the EURL (Entreprise Unipersonnelle à Responsabilité Limitée), which allows a sole trader to benefit from the same framework.
Why is the SARL still a good choice?
- A proven legal form for SMEs
Historically, the SARL has been the legal form of choice for small businesses in France. Traders, craftsmen, service providers, family businesses: the majority of micro-enterprises and small and medium-sized enterprises choose this form for its stability and legal clarity.
- An ideal structure for close partners
The SARL is often chosen by members of the same family or another group of trusted members. Its collegiate structure, division of powers and controlled transfer clauses ensure a secure relationship.
- Limited liability
As the name suggests, the partners' liability is limited to their contributions. In the event of difficulties, their personal assets are protected – except in the case of mismanagement, in which case personal liability may apply.
- A reassuring legal framework
The SARL does not have the flexibility of the SAS, but it offers a precise and protective legal framework, which is particularly appreciated in projects where rigour prevails over legal flexibility.
Main advantages of the SARL
- Strong legal certainty
- Ideal framework for small companies
- Limited liability
- Multiple tax options
- Beneficial social status for minority or co-managers (treated as employees)
The SARL offers a combination of advantages that make it particularly suitable for small businesses. Its legal framework is both solid and well-defined, giving partners a high degree of security – especially regarding the management of responsibilities and decision-making. Liability is limited to the value of the company’s assets, which protects partners’ personal assets in the event of difficulties. It is also a structure well suited to smaller organizations, often chosen by tradesmen, shopkeepers, or family businesses seeking a clear and predictable way of operating.
From a fiscal perspective, the SARL offers considerable flexibility: in principle, it is subject to corporation tax (IS), but under certain conditions it can opt to pay income tax (IR), which can be advantageous in the start-up phase or for family businesses. Finally, the social status of the business owner is another lever for optimization: If he or she is a minority or equal shareholder, they benefit from the assimilated employee regime, with more extensive social protection than that offered to self-employed workers, while retaining a degree of management flexibility.
Limitations to consider
- Rigid operation (mandatory general meetings, strict majority rules)
- Less flexible than an SAS in terms of organising management or opening up capital
- Majority manager affiliated to the TNS regime, with less protective (but less costly) social protection.
Despite its many advantages, the SARL also presents certain structural constraints that should be anticipated. Its operation is more rigid than that of an SAS, particularly when it comes to collective decision-making. General meetings are mandatory, and the majority rules set by law leave less room for manoeuvre in internal organisation. Moreover, the SARL offers little flexibility in the distribution of powers or the admission of new investors, which can hinder certain growth or fundraising projects. Another point to consider concerns the status of the majority manager, who is affiliated to the self-employed workers’ scheme (TNS). This status, though less costly in terms of social contributions, implies more limited social protection and sometimes heavier administrative management. These elements are not necessarily deal-breakers, but they deserve to be taken into account when choosing the legal form best suited to your project.
How to set up an SARL?
The creation of an SARL follows a fairly classic process:
- Drafting of the articles of association
- Deposit of the share capital
- Publication of a legal notice
- Filing the application with the French business registry
- Obtaining the Kbis, the official company identity card
The creation of an SARL is based on a relatively standardised process, which follows several key steps. Everything begins with the drafting of the articles of association, which must precisely define the company’s operating rules, the allocation of shares among the partners, the powers of the manager(s), as well as the decision-making procedures. Once the articles have been drafted, the partners proceed with the deposit of the share capital, which can be made up of cash (money) or in-kind contributions (assets), and is paid into a bank account in the name of the company being formed. There is no minimum capital requirement, but it must be appropriate in relation to the business activity. The capital can be contributed in cash or in kind.
Next, a legal notice of incorporation must be published in an authorised newspaper, in order to inform third parties of the company’s creation. It is only after this publication that the complete file can be submitted to the business registry, with all the required supporting documents like articles of association, proof of capital deposit and identity documents. If the file is compliant, the registry clerk then issues a Kbis extract, which formalises the company’s registration with the Trade and Companies Register – in French, the Registre du commerce et des sociétés (RCS). This document serves as proof of the SARL’s legal existence. It is its “birth certificate”.
The SARL in figures: a status chosen by the masses
In 2024, there were more than two million active SARLs in France, making it one of the most widespread legal forms. The popularity of the SARL has steadily increased over the decades, with annual registrations rising from just over 60,000 in half a decade ago to well over a million in recent years.
The SARL is especially popular among small and medium-sized enterprises, with about a fifth active in wholesale and retail trade, around one in seven in construction, and a similar share in professional, scientific, and technical services.
Although only about one in seven SARLs are based in Paris, the capital is home to far more SARL companies than any other French city. Marseille, for instance, comes in a distant second, with fewer than one in fifty SARLs registered there.
Observing an SARL in its economic environment
Whether you’re an investor, business partner, supplier, or competitor, having reliable information about an SARL can be crucial – especially for understanding who manages the company, its ownership links, financial health, and whether it is still active.
North Data offers quick and structured access to official company data, such as published annual accounts, changes in management, and the company’s legal history. Information on an SARL includes details such as management structure, ownership links, financial health, legal status, and published accounts. Data on subsidiaries, related entities, liquidation status, and companies that have been struck off enables informed decisions, strategic analysis, and thorough risk assessment for partnerships, audits, and market research.
Enduring Value Beyond the Spotlight
In an ever-changing entrepreneurial ecosystem, the SARL embodies a form of stability. It offers reassurance, structure and protection. Perhaps this explains its quiet but massive success.
At a time when other types of companies are in the limelight, the SARL continues to drive the real economy, quietly but effectively.
Perhaps its greatest asset is precisely its discretion.
