COMMERCIAL CODE(France)

COMMERCIAL CODE
COMMERCIAL CODE
With the participation of Louis VOGEL, Professor at the University of Paris II and, for the Book VI on Businesses in
difficulty, of Françoise PEROCHON, Professor at the University of Montpellier I
BOOK I
Commerce in general Articles L110-1 to
L146-4
TITLE I
The commercial act Articles L110-1 to
L110-4
Article L110-1
The law provides that commercial instruments are:
1° All purchases of chattels in order to resell this, either in kind or after having worked and developed this;
2° All purchases of real property in order to resell this, unless the purchaser has acted in order to construct one or
more buildings and to sell these en bloc or site-by-site;
3° All intermediate operations for the purchase, subscription or sale of buildings, business or shares of property
companies;
4° All chattels rental undertakings;
5° All manufacturing, commission and land or water transport undertakings;
6° All supply, agency, business office, auction house and public entertainment undertakings;
7° All exchange, banking or brokerage operations;
8° All public banking operations;
9° All obligations between dealers, merchants and bankers;
10° Bills of exchange between all persons.
Article L110-2
The law also deems commercial instruments to be:
1° All construction undertakings and all purchases, sales and resales of ships for inland and foreign-going
navigation;
2° All sea shipments;
3° All purchases and sales of ship’s tackle, apparatus and foodstuffs;
4° All chartering or chartering and bottomry loans;
5° All insurances and other contracts relating to maritime trade;
6° All agreements and conventions on crew wages and rents;
7° All engagements of seamen for the service of commercial ships.
Article L110-3
With regard to traders, commercial instruments may be proven by any means unless the law specifies otherwise.
Article L110-4
I.- Obligations deriving from trade between traders or between traders and non-traders shall be prescribed after ten
years unless they are subject to special shorter periods of prescription.
II.- All claims for payment shall be prescribed:
1° For food supplied to seamen on the captain’s orders, one year after delivery;
2° For the supply of materials and other items needed for the construction, equipment or supply of the ship, one
year after these foodstuffs are provided;
3° For built structures, one year after the acceptance of the structures.
III.- Claims for payment of the wages of officers, seamen and other crewmembers shall be prescribed after five
years in accordance with Article 2277 of the Civil Code.
TITLE II
Traders Articles L121-1 to
L128-6
CHAPTER I
Definition and status Articles L121-1 to
L121-3
SECTION I
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Capacity of trader Articles L121-1 to
L121-3
Article L121-1
Traders are those who carry out commercial instruments and who make this their usual profession.
Article L121-2
Minors, even when declared of full age and capacity, may not be traders.
Article L121-3
Spouses of traders shall be deemed to be traders only if they carry out a separate commercial activity from that of
their spouse.
SECTION II
Spouses of craftspeople and traders working in the family-owned undertaking
CHAPTER II
Foreign traders Articles L122-1 to
L122-4
Article L122-1
(Order No. 2004-279 of 25 March 2004 Art. 1 1 Official Journal of 27 March 2004)
A foreign national shall not be engaged in a commercial, industrial or handicraft occupation in France in a manner
which requires his registration or inclusion in the register of companies or the trade register without the prior consent of
the Prefect of the Department in which he envisages conducting his business initially.
Article L122-2
Any breach of the requirements of Article L.122-1 and of those in the implementing decree specified in Article
L.122-4 shall be punished by a prison sentence of six months and a fine of 25 000 F. In cases of recidivism, the
penalties shall be doubled. The court may also order the closure of the establishment.
Article L122-3
(Order No. 2004-279 of 25 March 2004 Art. 1 2 Official Journal of 27 March 2004)
I. - The provisions of Articles L. 122-1 and L. 122-2 do not apply to the citizens of a European Community member
state, a European Economic Area member state or a member state of the Organisation for Economic Cooperation and
Development acting on their own behalf or on behalf of either another citizen of such a State or a company incorporated
pursuant to the legislation of such a State and having its registered office, its principal administrative establishment or its
principal place of business in such a State.
II. - However, when a foreign national or a company referred to in I creates an agency, a branch or a subsidiary on
French soil or provides services there, the benefit of I shall be granted only if:
1. The foreign national is established in a European Community member state, a European Economic Area member
state or a member state of the Organisation for Economic Cooperation and Development;
2. The company, if it has only its registered office in the European Community, a European Economic Area member
state or a member state of the Organisation for Economic Cooperation and Development, conducts a business which
has an effective and continuous link with the economy of such a State.
Article L122-4
A Conseil d'Etat decree shall fix the conditions for implementing this chapter.
CHAPTER III
General obligations of traders Articles L123-1 to
L123-28
SECTION I
Commercial and companies register Articles L123-1 to
L123-11
Subsection 1
Persons required to register Articles L123-1 to
L123-5-1
Article L123-1
I.- A commercial and companies register shall be kept in which the following shall be registered as a result of their
declaration:
1° Natural persons with the capacity of trader, even if they are required to register in the trades register;
2° Companies and economic interest groups which have their registered office in a French department and which
have a legal personality in accordance with Article 1842 of the Civil Code or with Article L.251-4;
3° Commercial companies whose registered office is situated outside a French department and which have an
establishment in one of these departments;
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4° French public establishments of an industrial or commercial nature;
5° Other legal persons whose registration is specified by the acts and regulations;
6° Commercial delegations or commercial agents of foreign States, authorities or public establishments established
in a French department.
II.- The registrations and instruments or documents filed as specified by a Conseil d'Etat decree shall appear in the
register in order to be brought to the attention of the public.
Article L123-2
No-one may be registered in the register if they do not meet the conditions required in order to carry out their
activity. Legal persons must also have complied with the formalities specified by the legislation and regulations in force
relating thereto.
Article L123-3
If a trader who is a natural person fails to request registration by the specified deadline, the judge hearing the case
shall, either automatically or at the request of the procureur de la République or any person proving that they have an
interest in this, make an order requiring the trader to request registration.
In accordance with the same conditions, the judge may order any person registered in the commercial and
companies register, who has not requested these by the specified deadlines, to make the additional entries or
corrections which must be made in the register, to make the entries or corrections needed in the event of incorrect or
incomplete declarations or to deregister.
The clerk of a court delivering a decision requiring a person to register must notify this decision to the clerk of the
Tribunal de commerce whose jurisdiction covers the registered office or main establishment of the interested party. The
clerk of the Tribunal de commerce receiving the decision shall refer this to the judge responsible for overseeing the
register.
Article L123-4
(Law No 2000-916 of 19 September 2000 Article 3 Official Gazette of 22 September 2000 effective 1 January 2002)
(Law No 2003-7 of 3 January 2003 Article 50 (II) Official Gazette of 4 January 2003)
If any person ordered to request a registration, a supplementary or amending entry, or a striking-off in the trade
register should fail to comply with that requirement without an excuse deemed to be valid within two weeks of the date
on which the order made by the judge entrusted with supervision of the list directing him to complete one of those
formalities becoming final, a fine of €3,750 euros shall be imposed on that person.
The court may, moreover, deprive the person concerned of the right to vote in, and to stand in, elections to the
commercial courts, the chambers of commerce and industry and the industrial tribunals for a period of up to five years.
The court orders that the registration, the notations or the striking-off that must be recorded in the companies
register be entered therein within a specified timeframe, at the request of the person concerned.
Article L123-5
The act of giving, in bad faith, incorrect or incomplete information with a view to registration, removal of the
registration or additional entries or corrections in the commercial and companies register shall be punished by a fine of
30 000 F and a prison sentence of six months.
The provisions of the second and third paragraphs of Article L.123-4 shall apply in the cases specified in this article.
Article L123-5-1
(inserted by Act No 420 of 15 May 2001, Article 123 II, Official Gazette of 16 May 2001)
At the request of any interested party or the procureur de la République, the president of the court, ruling in
interlocutory proceedings, may enjoin, subject to a penalty, the manager of any legal person to file the documents and
instruments with the commercial and companies register which this legal person is required to do by the acts or
regulations.
The president may, in accordance with the same conditions and to this same end, appoint a representative
responsible for fulfilling these formalities.
Subsection 2
Keeping of the register and effects attached to registration Articles L123-6 to
L123-9-1
Article L123-6
The commercial and companies register shall be kept by the clerk of each Tribunal de commerce. It shall be
overseen by the president of the court or a judge entrusted with this responsibility who shall be competent for all
disputes between the person under obligation and the clerk.
Article L123-7
The registration of a natural person shall involve the presumption of the capacity of trader. However, this
presumption shall not be binding on third parties and administrations which provide proof to the contrary. Third parties
and administrations shall not be permitted to rely on this presumption if they know that the liable person is not a trader.
Article L123-8
The person obliged to register who has not requested this by the expiration of a period of fifteen days from the start
of their activity may not rely on, until registration, the capacity of trader with regard to both third parties and public
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administrations. However, this person may not invoke their failure to register in order to avoid the responsibilities and
obligations inherent in this capacity.
Without prejudice to the application of Article L.144-7, registered traders who assign their business or hand over the
operation of this, particularly in the form of real estate management, may not plead the cessation of their commercial
activity in order to avoid claims for damages to which they shall be subject due to the obligations contracted by their
successors in the operation of the business until the day when the corresponding additional entry or removal of the
registration has been carried out.
Article L123-9
Persons obliged to register may not, in carrying out their activity, raise in respect of third parties or public
administrations, which may, however, rely on these, the acts and instruments subject to entry unless the latter have
been published in the register.
In addition, persons obliged to file instruments or documents in the annex to the register may not raise these against
third parties or administrations unless the corresponding formality has been carried out. However, third parties or
administrations may rely on these instruments or documents.
The provisions of the above paragraphs shall apply to the acts or instruments subject to entry or filing even if they
are covered by another legal publication. Third parties and administrations which personally knew about these acts or
instruments may not, however, rely on these.
Article L123-9-1
(inserted by Law No. 2003-721 of 1 August 2003 Article 2 (I) Official Gazette of 5 August 2003)
The court registrar or the body referred to in the last paragraph of Article 2 of Law No. 94-126 of 11 February 1994
relating to individual initiative and enterprise shall deliver a receipt, free of charge, for the submission of an application to
create a business to any person subject to registration, as soon as that person has submitted a duly completed
application for registration. The said receipt allows the necessary formalities to be completed with the public bodies and
the private bodies entrusted with rendering a public service, under the personal responsibility of the natural person
having tradesman status or who is acting on behalf of the company being formed. It bears the legend:"Registration
pending".
The implementing provisions for the present Article are defined in a Conseil d'Etat decree.
Subsection 3
Place of domicile of registered persons Articles L123-10 to
L123-11
Article L123-10
(inserted by Law No. 2003-721 of 1 August 2003 Article 6 (I) (1) Official Gazette of 5 August 2003)
Natural persons applying for registration in the companies register or the trade register must declare their business
address and substantiate possession thereof.
Natural persons may declare the address of their place of residence and conduct their business there, barring any
legislative provision or contractual stipulation to the contrary.
Natural persons who do not have business premises may declare their place of residence, solely for the purpose of
providing a business address. Such a declaration does not give rise to any change of use or to application of the
commercial lease regulations.
NB: Law No. 2003-721 of 1 August 2003 Article 6 II: These provisions apply to businesses listed in the companies
register or the trade register on the date of promulgation of Law No. 2003-721 of 1 August 2003.
Article L123-11
(Law No 2003-721 of 1 August 2003 Article 6 (I) (2) Official Gazette of 5 August 2003)
Any legal entity applying for registration in the companies register must substantiate possession of the premises
which will house its registered office, alone or with others, or, if the registered office is to be located abroad, the agency,
branch or representation established on French soil.
A company is allowed to have its registered address in premises occupied by several businesses under the
conditions determined in a Conseil d'Etat decree. That decree also stipulates the equipment or services that are required
to justify the reality of the registered office of the company domiciled there.
NB: Law No. 2003-721 of 1 August 2003 Article 6 II: These provisions apply to businesses registered in the
companies register or the trade register on the date of promulgation of Law No. 2003-721 of 1 August 2003.
SECTION II
Accounts of traders Articles L123-12 to
L123-28
Subsection 1
Financial liabilities applicable to all traders Articles L123-12 to
L123-24
Article L123-12
All natural or legal persons with the capacity of trader shall enter in their accounts the movements affecting the
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assets of their undertaking. These movements shall be recorded chronologically.
These persons must check, by means of a stocktake at least once every twelve months, the existence and value of
the assets and liabilities of the undertaking.
They must prepare annual accounts at the end of the financial year in view of the entries made in the accounts and
the stocktake. These annual accounts shall consist of the balance sheet, profit and loss account and an annex which
shall form an inseparable whole.
Article L123-13
The balance sheet shall describe individually the assets and liabilities of the undertaking and shall clearly show the
equity capital.
The profit and loss account shall summarise the income and expenditure for the financial year without taking into
account their date of receipt or payment. It shall show, according to the difference after deducting the depreciation and
provisions, the profit or loss for the financial year. The income and expenditure, classed by category, shall be presented
in the form of either tables or lists.
The amount of the undertaking’s commitments in terms of pensions, supplemental pensions, compensation and
allowances due to retirement or similar advantages of its staff members or partners and its managing agents shall be
indicated in the annex. In addition, undertakings may decide to enter in the balance sheet, in the form of a provision, the
amount corresponding to all or part of these commitments.
The annex shall supplement and comment on the information given in the balance sheet and the profit and loss
account.
Article L123-14
The annual accounts shall be honest and truthful and shall ensure a fair representation of the assets, financial
situation and results of the undertaking.
When the application of an accounting requirement is not sufficient to ensure the fair representation indicated in this
article, additional information must be provided in the annex.
If, in an exceptional case, the application of an accounting requirement proves to be unsuitable in order to ensure a
fair representation of the assets, financial situation or results, an exception must be made to this. This exception shall
be indicated in the annex and duly reasoned, with an indication of its effect on the assets, financial situation and results
of the undertaking.
Article L123-15
The balance sheet, profit and loss account and annex shall include as many headings and items as are needed to
ensure a fair representation of the assets, financial situation and results of the undertaking. Each item in the balance
sheet and profit and loss account shall contain the figure relating to the corresponding item for the previous financial
year.
The classification of the elements of the balance sheet and profit and loss account, the elements forming the equity
capital and the texts to be included in the annex shall be fixed by decree.
Article L123-16
Traders, whether natural or legal persons, may, in accordance with the conditions fixed by a decree, adopt a
simplified presentation of their annual accounts when these do not exceed, at the end of the financial year, the figures
fixed by decree for two of the following criteria: the total of their balance sheet, the net amount of their turnover or the
average number of permanent employees during the financial year. They shall lose this option when this condition is not
met for two successive financial years.
Article L123-17
Unless an exceptional change occurs in the trader’s situation, whether a natural or legal person, the presentation of
the annual accounts and the valuation methods used may not be altered from one financial year to the next. If
alterations occur, these shall be described and justified in the annex.
Article L123-18
On its date of entry into the capital assets, property acquired for money consideration shall be recorded at its cost of
acquisition, property acquired free of charge shall be recorded at its market value and property produced shall be
recorded at its cost of production.
For fixed assets, the values used in the stocktake shall, if applicable, take account of the depreciation plans. If the
value of a fixed asset falls below its net book value, the latter shall be reduced to the stocktake value at the end of the
financial year, whether or not the depreciation is final.
Wasting assets shall be valued either at its weighted average cost of acquisition or production or by considering that
the first item out is the first item in.
The asset appreciation noted between the stocktake value of an item and its entry value shall not be entered in the
accounts. If this results from a revaluation of all the tangible and capital assets, the revaluation difference between the
current value and the net book value may not be used to offset losses. It shall be clearly entered on the liabilities side of
the balance sheet.
Article L123-19
The assets and liabilities shall be valued separately.
No offsetting may be applied between the assets and liabilities items of the balance sheet or between the income
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and expenditure items of the profit and loss account.
The opening balance sheet for a financial year shall correspond to the closing balance sheet for the previous
financial year.
Article L123-20
The annual accounts must respect the precautionary principle. In order for these accounts to be prepared, traders,
whether natural or legal persons, shall be presumed to be continuing their activities.
Even in the absence or insufficiency of any profit, the necessary depreciation and provisions must be established.
The risks and losses occurring during the financial year or during a previous financial year shall be taken into
account, even if they are identified between the end date of the financial year and that of the preparation of the
accounts.
Article L123-21
Only the profits made by the end date of a financial year may be entered in the annual accounts. The profit made
on a partially executed transaction, accepted by the other contracting party, may be entered, after the stocktake, when
its completion is certain and when it is possible, using the projected accounting documents, to value the overall profit of
the transaction with sufficient safety.
Article L123-22
(Law No 2003-7 of 3 January 2003 Article 50 (II) Official Gazette of 4 January 2003)
The accounting documents are expressed in euros and drafted in the French language.
The accounting documents and supporting documentation are kept for ten years.
The accounting documents relating to the recording of transactions and the inventory are prepared and maintained
without blanks or alterations of any kind in conditions determined in a Conseil d'Etat decree.
Article L123-23
Duly kept accounts may be accepted in the courts in order to act as proof between traders in respect of commercial
instruments.
If the accounts have not been duly kept, they may not be invoked by their author for the latter’s benefit.
The communication of accounting documents may be ordered in the courts only in cases of succession, joint
ownership and partition of a company and in the event of administrative order or court-ordered winding-up.
Article L123-24
(Law No 2003-7 of 3 January 2003 Article 50 (II) Official Gazette of 4 January 2003)
All traders are required to open a current account with a bank or the post office.
Subsection 2
Financial liabilities applicable to certain traders who are natural persons Articles L123-25 to
L123-28
Article L123-25
As an exception to the provisions of the first and third paragraphs of Article L.123-12, natural persons placed
voluntarily or ipso jure under the effective simplified taxation system may record claims and debts only at the end of the
financial year and shall not have to prepare an annex.
Article L123-26
As an exception to the provisions of the second paragraph of Article L.123-13, natural persons placed voluntarily or
ipso jure under the effective simplified taxation system may record in their profit and loss account, according to its
payment date, expenditure whose frequency does not exceed one year, excluding purchases.
Article L123-27
As an exception to the provisions of the third paragraph of Article L.123-18, natural persons placed voluntarily or
ipso jure under the effective simplified taxation system may carry out a simplified valuation of the stocks and work in
process according to a method fixed by decree.
Article L123-28
As an exception to the provisions of Articles L.123-12 to L.123-23, natural persons subject to the taxation system for
micro-undertakings may not be required to prepare annual accounts. They must, in accordance with the conditions fixed
by decree, record on a day-by-day basis the accounts received and the expenses paid and they must produce an
end-of-year statement of the accounts received and expenses paid, the financial debts, the fixed assets and the stocks
valued in a simplified manner.
However, when their annual turnover does not exceed an amount of 120 000 F, natural persons registered in the
commercial and companies register may keep only one book chronologically recording the amount and origin of the
income which they receive due to their professional activity. A decree shall fix the conditions in accordance with which
this book shall be kept.
CHAPTER IV
Cooperative associations of retailers Articles L124-1 to
L124-16
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Article L124-1
(Act No. 2001-420 of 15 May 2001 Art. 64 I, II and III Official Journal of 16 May 2001)
(Order No. 2004-274 of 25 March 2004 Art. 1 Official Journal of 27 March 2004)
Through the collective efforts of their members, retail cooperative societies seek to improve the conditions in which
they conduct their business. To that end, they may, inter alia, directly or indirectly engage in the following activities on
behalf of their members:
1. Supplying them with some or all of the goods, commodities, services, equipment and materials they need in order
to conduct their business by, inter alia, establishing and maintaining stocks of all kinds of goods, by building, purchasing,
or leasing and managing private shops and warehouses, and by carrying out in their own premises or those of their
members any appropriate works, conversions or modernisation;
2. Bringing together on one site the businesses belonging to their members, creating and managing all services
collectively needed to operate those businesses, building, purchasing or renting the buildings required for their activities
or those of their members, and managing them, all as provided for in Chapter V of the present Part;
3. Within the framework of the legislative provisions relating to financial activities, to facilitate access by the
members and their clients to the various financing and credit facilities available;
4. Carrying out activities which are complementary to those referred to above, and, inter alia, providing their
members with assistance in relation to technical, financial and accounting management;
5. Purchasing businesses in respect of which, contrary to the provisions of Article L. 144-3, leasing-management
rights are granted to a member within two months and which, under pain of the penalties laid down in the second and
third paragraphs of Article L. 124-15, must be re-conveyed within a maximum period of seven years;
6. Drawing up and implementing a common commercial policy designed to ensure the development and
permanence of its members by any means, including:
- the establishment of an appropriate legal framework;
- the provision of trademarks or brand names which they own or have the use of;
- the carrying out of commercial operations, of an advertising or other nature, which may include common pricing;
- the development of common methods and models for purchasing, stocking and presenting products, and for the
architecture and organisation of the outlets;
7. Acquiring shareholdings, including majority interests, in directly or indirectly associated retail businesses.
Article L124-2
Cooperative associations of retailers may not allow non-member third parties to benefit from their services.
However, cooperative associations of retail pharmacists may not refuse their services, in the event of an
emergency, to non-member retail pharmacists and to all the public or private establishments where patients are treated,
when these establishments duly own a pharmacy.
Article L124-3
Cooperative associations of retailers shall be public limited companies with variable capital formed and operating in
accordance with the provisions of Book II, Title III, Chapter I. They shall be governed by the provisions of the present
chapter and by those which are not contrary hereto in Book II, Titles I to IV and in Act No 1775 of 10 September 1947
defining the rules governing cooperation. The provisions of Book II, Titles I to IV on the formation of statutory reserves
shall apply thereto.
Only associations and unions formed in order to carry out the operations referred to in Article L.124-1 and which
comply, in respect of their formation and operation, with the requirements of this chapter may be regarded as
cooperative associations of retailers or unions of these associations. Only these shall be authorised to take this title and
to add it to their name.
Article L124-4
(Order No. 2004-274 of 25 March 2004 Art. 2 Official Journal of 27 March 2004)
Without prejudice to application of the provisions of Article 3 bis of Act No. 47-1775 of 10 September 1947 instituting
cooperative status, any retail trading entity which is properly established in a Foreign State may become a member of
cooperative retail societies. The same applies to the cooperative companies governed by the present Chapter, as well
as companies which are registered in both the trade register and the register of companies. The cooperatives governed
by the present Chapter may admit to membership natural persons or legal entities having relevant commercial activities
and possessing the requisite competence.
Cooperative retail companies engaged in the activities referred to in 2 of Article L. 124-1 may, moreover, admit to
membership any person referred to in Article L. 125-1.
Retailers whose cooperative is affiliated to another cooperative retail society may benefit directly from that society's
services.
Article L124-5
The associations governed by this chapter may establish between them unions having the same aims as those
defined in Article L.124-1.
These unions must comply, in respect of their formation and operation, with the same rules as said associations.
The second paragraph of Article 9 of the Act of 10 September 1947 defining the rules governing cooperation shall apply
thereto.
Unions of cooperative associations of retailers may contain only cooperative associations of retailers or their
members. Retailers whose cooperative is affiliated to a union may benefit directly from the services of this union.
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Cooperative associations of retailers and their unions may form mixed unions with other cooperative associations
and their unions.
As an exception to Article L.225-1, the number of members in a union governed by this article may be less than
seven.
Article L124-7
The articles of association may specify that cooperative associations of retailers shall be combined in accordance
with the conditions specified in Article 3a of the Act of 10 September 1947 defining the rules governing cooperation. In
this case, these associations may not use the services of the cooperative association with which they are combined.
Article L124-8
The decisions of the general meeting shall only be valid when one-third of the members existing on the date of the
meeting are present or represented.
However, the decisions of meetings convened in order to amend the articles of association shall only be valid if at
least half of the members existing on the date when the meeting is convened are present or represented.
Members who have voted by post, where the articles of association authorise this, shall be taken into account for
determining the quorum.
When the quorum is not reached, a new meeting shall be convened. Its decisions shall be valid whatever the
number of members present or represented.
Article L124-9
(Order No. 2004-274 of 25 March 2004 Art. 4 Official Journal of 27 March 2004)
The deliberations of the general meeting are taken on a majority of the votes held by the members present or
represented. However, a majority of two thirds of the votes of the members present or represented is required for any
change to the articles of association.
If the cooperative is engaged in the activities referred to in 2 of Article L. 124-1, this provision does not apply in the
circumstances referred to in Article L. 125-10.
Article L124-10
The exclusion of a member may be ordered, as applicable, by the board of directors or the supervisory board, with
the interested party being duly heard.
All members subject to an exclusion order shall be able to appeal against this decision before the general meeting
which shall rule on the appeal at the first routine meeting following the notification of exclusion. This exclusion shall
enter into force on the date of notification of its acceptance by the general meeting.
However, the board of directors or the supervisory board, as applicable, may, in the interests of the association,
suspend the exercise of the rights which the excluded member enjoys due to being a member of the cooperative until
notification is sent to the latter of the general meeting’s decision. The duration of this suspension may not exceed one
year.
If the decision to exclude a member is not justified by a serious and legitimate reason, the court, referred to within
one month of the notification of refusal of the member’s appeal by the general meeting, may either reinstate the unduly
excluded member or allocate damages thereto or order both of these measures.
When the cooperative carries out the activities specified in 2° of Article L.124-1, the provisions of this article shall
not apply. Articles L.125-15 and L.125-16 shall apply.
Article L124-11
(Order No. 2004-274 of 25 March 2004 Art. 5 Official Journal of 27 March 2004)
If a cooperative is engaged in the activities referred to in 2 of Article L. 124-1, the redemption of the cooperative's
shares held by a withdrawing or excluded member takes place, contrary to Article 18 of the act of 10 September 1947
instituting cooperative status, as provided for in Articles L. 125-17 and L. 125-18.
The said member nevertheless remains liable, towards both the cooperative and third parties, for a period of five
years commencing on the day on which it definitively ceases to be a member, in respect of obligations which existed at
the close of the financial year during which it left the cooperative. Pursuant to the previous paragraph, the board of
directors or the supervisory board, as applicable, may retain some or all of the sums owed to the former member, for a
maximum period of five years, limited to the amount required to guarantee the obligations for which it is liable pursuant
to the present paragraph, unless the party concerned provides sufficient sureties.
Article L124-12
The routine shareholders’ meeting may, by ruling in accordance with the quorum and majority conditions of the
special shareholders’ meeting, convert into shares all or part of the refunds frozen in individual accounts and all or part
of the refunds distributable to the cooperative members in the last financial year.
In the latter case, the rights of each cooperative member to the allotment of shares resulting from this increase in
capital shall be identical to those which they would have to the distribution of the refunds.
Article 124-13
The central cooperative credit agency shall be authorised to carry out all financial transactions in favour of
associations formed in accordance with the provisions of this chapter. In particular it shall make available thereto the
funds which are specifically allotted to the agency or which it may obtain in the form of loans or by rediscounting
subscribed bills, it shall give its backing or act as guarantor in order to guarantee their loans and it shall receive and
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manage their fund deposits.
Article L124-14
If a cooperative association or union governed by the provisions of this chapter is dissolved, and subject to the
provisions of the following paragraphs of this article, the net surplus of assets over the capital shall be passed either to
other cooperative associations or unions of cooperatives or to works of general or professional interest.
However, a cooperative association or union may be authorised by an Order of the Minister for Economic and
Financial Affairs, adopted following an opinion from the Cooperation Authority, to divide the net surplus of assets among
its members. This division may not include the part of the net surplus of assets resulting from aid granted directly or
indirectly to the association or union by the State or by a public authority. This part must be repaid in accordance with
the conditions specified by the authorisation Order.
The division between the members of the net surplus of assets shall occur ipso jure when the cooperative
association carries out the activities referred to in 2° of Article L.124-1.
Article L124-15
All groups of retailers established in order to carry out one or more of the activities referred to in 1°, 3° and 4° of
Article L.124-1 must, if they have not adopted the form of a cooperative association of retailers governed by the
provisions of this chapter, be formed as a public limited company, limited liability company, economic interest group or
European economic interest group.
If a group of retailers is formed in breach of the provisions of the previous paragraph, this shall be punished by a
fine of 60 000 F.
The court may also order the cessation of the operations of the body in question and, if applicable, the confiscation
of the commodities purchased and the closure of the premises used.
Article L124-16
Cooperative associations of retailers for joint purchasing and their unions formed in accordance with Act No 1070 of
2 August 1949 shall be regarded as meeting the provisions of this chapter without needing to amend their articles of
association.
However, the associations benefiting from the provisions of the previous paragraph shall bring their articles of
association into line when they amend these subsequently.
CHAPTER V
Collective shops of independent traders Articles L125-1 to
L125-19
SECTION I
Formation of the collective shop Articles L125-1 to
L125-9
Article L125-1
The provisions of this chapter shall apply to natural or legal persons gathered in the same place and under the
same name in order to operate, according to common rules, their business or their undertaking registered in the trades
register without giving up ownership of this, thus creating a collective shop of independent traders.
Article L125-2
The persons referred to in Article L.125-1 shall form, in the form of an economic interest group, public limited
company with variable capital or a cooperative association of retailers, a legal person which shall own and use or solely
use the buildings and annexed areas of the collective shop, define and implement the common policy and organise and
manage the common services.
The economic interest group, company or association which owns all or part of the land, buildings and annexed
areas of the collective shop may not return all or part of this property to its members during the existence of said shop.
Only economic interest groups, public limited companies with variable capital and cooperative associations of
retailers which comply, in respect of their formation and operation, with the requirements of this chapter may be
regarded as collective shops of independent traders. These alone shall be authorised to take this title and to add it to
their name.
Article L125-3
The economic interest group, company or association which has recourse to leasing shall be regarded as a user
within the meaning of Article 5b of Order No 837 of 28 September 1967.
Article L125-4
Each member of the economic interest group, company or association shall hold inseparable shares in the use of a
space determined by the formation agreement or articles of association and shall benefit from common services.
The formation agreement or articles of association may allot any holder another space for seasonal activities.
The meeting of members or the general meeting, as applicable, shall alone be competent to amend, with the
agreement of the interested parties, the spaces thus allotted.
The provisions of this chapter on partner’s shares shall apply to the shares referred to in the first paragraph above.
Article L125-5
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When a business or an undertaking registered in the trades register is transferred to or created in the collective
shop, no contribution shall be made to the group, company or association for the shares allotted to its owner. The
shares in the group, company or association shall not represent the value of the business or undertaking. Any
contributions other than in cash are also prohibited.
Article L125-6
In the event of leasing-management of the business or the undertaking registered in the trades register, only the
lessor shall be a member of the group, company or association.
The transfer within the collective shop of a pre-existing business or undertaking may occur only with the agreement
of the lessee-manager.
Article L125-7
The owner of a business subject to a preferential right or charge specified by Chapters I to III of Title IV of this book
must, prior to joining a collective shop and to transferring this business to said shop, comply with the publication
formalities specified in Articles L.141-21 and L.141-22.
If the preferred creditor or charge has not notified any objection by filing this with the registry within ten days of the
last in date of the publications specified in Articles L.141-12 and L.141-13, this creditor shall be deemed to have agreed
to the membership of the owner of the business.
In the event of an objection, the lifting of this shall be ordered by the courts if the owner of the business proves that
the securities which the creditor has are not reduced by membership of the collective shop or that guarantees which are
at least equivalent are offered thereto. If the objection is not lifted, the trader may not become a member of the
collective shop while remaining the owner of the business.
Article L125-8
The formation agreement or articles of association shall, in order to be valid, and under the joint liability of the
signatories, contain the express specification that no business shall be subject to the preferential right or a charge
specified in Chapters I to III of Title IV of this book or, in the opposite case, that no objection has been formed prior to
the membership of one of the members or that the lifting of the objection has been ordered by the courts.
Article L125-9
Collective shops of independent traders already created in the form of a legal person may, by their adaptation or
conversion, be placed under the system specified by this chapter.
All members may, through interlocutory proceedings, request the appointment of a representative specially
entrusted with convening the meeting in order to rule on these adaptations or conversions.
Notwithstanding any provision to the contrary, these decisions shall be taken by a majority in number of the
members forming the legal person. Those who did not take part in this may, however, withdraw by demanding the
redemption of their shares in accordance with the conditions specified in Articles L.125-17 and L.125-18.
SECTION II
Administration of the collective shop Articles L125-10 to
L125-11
Article L125-10
Internal regulations shall be annexed to the formation agreement or articles of association, as applicable.
The formation agreement or articles of association, and the internal regulations, may be amended only by the
meeting, or the general meeting, as applicable, ruling by an absolute majority in number of the members of the group,
company or association or, if the formation agreement or articles of association specify this, by a larger majority. The
same shall apply to decisions on approval or exclusion.
Other decisions shall be taken in accordance with the conditions specific to each of the forms specified in Article
L.152-2. However, notwithstanding the provisions of Book II, the articles of association of a public limited company with
variable capital formed pursuant to this chapter may stipulate that each of the shareholders has one vote at the general
meeting, whatever the number of shares held thereby.
Article L125-11
The internal regulations shall determine the rules for ensuring a common business policy. It shall fix the general
operating conditions and in particular:
1° The days and times of opening and, if applicable, the seasonal periods of closure or the annual holidays;
2° The organisation and management of the common services and the distribution of the charges corresponding to
these services;
3° Subject to the legislation in force in this respect, the development of competing activities and the determination of
the annexed activities which may be carried out by each member in competition with those of other members of the
shop;
4° The choice of advertising and decor specific to each space and possibly their harmonisation;
5° The collective or individual actions to promote the shop, particularly those of a seasonal nature.
SECTION III
Approval and exclusion Articles L125-12 to
L125-18
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Article L125-12
The formation agreement or articles of association, as applicable, may subordinate any assignment of shares to the
approval of the transferee by the meeting of the group or by the general meeting of the company or association, as
applicable. The meeting or general meeting shall decide within one month of the date of the approval request.
The formation agreement or articles of association, as applicable, may also subject to this approval the legal
successors of a deceased shareholder who did not participate in his activity in the collective shop.
Refusal of approval shall confer the right to compensation in accordance with the conditions specified in Articles
L.125-17 and L.125-18.
Article L125-13
The approval clause shall not be binding in the event of a forced sale of shares, whether or not these have been
subject to a charge.
Article L125-14
The formation agreement or articles of association, as applicable, may subordinate the leasing-management of a
business or craft manufacturing company in the collective shop to the approval of the lessee-manager by the meeting.
In the event of administrative order or winding-up proceedings of the owner, this clause may not be invoked if the
conclusion of a real estate management contract is authorised by the court in accordance with the provisions of Title II of
Book VI.
Article L125-15
The administrative body of the collective shop may send a warning to any member who, personally or through the
persons to whom the latter has entrusted the operation of his business or undertaking, breaches the internal regulations.
In the event of real estate management, this warning shall also be notified to the lessee-manager.
If, in the following three months, this warning does not produce any effect and if the legitimate interests of the
collective shop or of certain of its members are compromised, the meeting of members, or the general meeting, as
applicable, shall have the option of deciding, by the majority specified in Article L.125-10, on the exclusion of the
interested party.
Until the exclusion decision becomes final, the person excluded shall be able to put forward one or more transferees
in accordance with the conditions determined by the formation agreement or articles of association.
Article L125-16
Subject to the shares valuation procedure specified in the second paragraph of Article L.125-17, any member of a
collective shop may refer to the Tribunal de grande instance, within one month of its notification by registered letter with
a request for acknowledgement of receipt, any decision taken pursuant to Articles L.125-12, L.125-14 and the third
paragraph of Article L.125-15.
The court may declare void or alter the decision referred thereto or replace this with its own decision.
Notwithstanding any clause to the contrary, recourse to the courts shall suspend the implementation of the referred
decision, except in the event of an exclusion decision motivated by the non-use of spaces or by the non-payment of
charges.
Article L125-17
In the event of exclusion, departure or death accompanied by the refusal of approval of the transferee or
successors, the shareholder or, in the event of death, the latter’s legal successors, shall be able to transfer or dispose of
the business or the undertaking registered in the trades register. The new allottee of the space or, failing this, the group,
company or association, as applicable, shall reimburse thereto the value of their shares plus, where applicable, the
asset appreciation which may have resulted from their developments to the space which they held.
This value shall be fixed by the meeting or general meeting, as applicable, at the same time as the exclusion
decision or that refusing to approve the transferee or successors is taken. In the event of disagreement, this shall be
determined on the date of these decisions by an expert appointed by an order of the president of the Tribunal de grande
instance ruling in interlocutory proceedings. This order shall not be open to any appeal, notwithstanding any clause to
the contrary. The expert report shall be subject to the approval of the president of the Tribunal de grande instance ruling
in interlocutory proceedings.
Article L125-18
(Law No 2003-7 of 3 January 2003 Article 50 (II) Official Gazette of 4 January 2003)
In the cases referred to in the first paragraph of Article L. 125-17, the group or the company can only proceed with
the installation of a new beneficiary if it has paid the former holder of the shares or, if he is deceased, his assigns, the
sums referred to in the said Article L. 125-17, or, failing that, a consideration determined by the presiding judge of the
district court ruling on a summary basis.
However, such prior payment is not required when a guarantee has been provided for the value of those sums or of
that provision by a lending institution or a financial institution duly authorised for that purpose, or when that amount has
been placed in the hands of a representative, designated if necessary by an order made on a summary basis.
Moreover, if it is a cooperative, the board of directors or the executive board, as applicable, can invoke the
provisions of the second line of Article L. 124-11.
SECTION IV
Dissolution Article L125-19
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Article L125-19
Unless a clause in the formation agreement or articles of association specifies otherwise, the administrative order or
winding-up proceedings of one of the members shall not lead ipso jure to the dissolution of the economic interest group.
CHAPTER VI
Mutual guarantee schemes Article L126-1
Article L126-1
The rules creating mutual guarantee schemes between traders, industrialists, manufacturers, craftspeople,
commercial companies, members of the professions and owners of property or property rights and also between the
operators mentioned in Article L.524-1 shall be fixed by the Act of 13 March 1917.
CHAPTER VII
The business-plan support contract for the creation or takeover of a business activity Articles L127-1 to
L127-7
Article L127-1
(inserted by Law No. 2003-721 of 1 August 2003 Article 20 Official Gazette of 5 August 2003)
The support provided for a business plan to create or take over a business activity is defined in a contract through
which, using the means available to it, a legal entity undertakes to provide specific and continuous help to a natural
person who is not in full-time employment and who undertakes to follow a preparatory programme covering the creation,
takeover and management of a business activity. Such a contract can also be entered into by a legal entity and a
manager who is the sole partner of another legal entity.
Article L127-2
(inserted by Law No. 2003-721 of 1 August 2003 Article 20 Official Gazette of 5 August 2003)
The business-plan support contract is entered into for a term which cannot exceed twelve months, renewable twice.
The terms and conditions of the support and preparation programme and the respective commitments of the contracting
parties are stipulated in the contract. It also determines the conditions under which the person benefiting therefrom can
make commitments to third parties in relation to the planned business activity.
The contract is entered into in writing, otherwise it is null and void.
Article L127-3
(inserted by Law No. 2003-721 of 1 August 2003 Article 20 Official Gazette of 5 August 2003)
The fact that the legal entity providing support makes facilities available to the beneficiary to prepare him for the
creation, or takeover and management, of the planned business activity does not, of itself, constitute any presumption of
a relationship of subordination.
The provision of those means and any costs thereby incurred by the legal entity providing the support pursuant to
the contract shall be posted to its balance sheet.
Article L127-4
(inserted by Law No. 2003-721 of 1 August 2003 Article 20 Official Gazette of 5 August 2003)
If a business activity begins while the contract is still in force, the beneficiary must register the business if the nature
thereof makes this necessary.
Before any registration is effected, the commitments made to third parties by the beneficiary while the support and
preparation programme was ongoing are, in regard to those third parties, assumed by the mentor. After registration, the
supporting legal entity and the beneficiary are jointly and severally bound by the commitments made by the latter
pursuant to the stipulations of the support contract, until it expires.
Article L127-5
(inserted by Law No. 2003-721 of 1 August 2003 Article 20 Official Gazette of 5 August 2003)
The business-plan support contract for the creation or takeover of a business activity cannot have as its object or its
effect infringement of the provisions of Articles L. 125-1, L. 125-2, L. 324-9 or L. 324-10 of the Labour Code.
The act of creating or taking over a business must be clearly distinguished from the supervisory function.
Article L127-6
(inserted by Law No. 2003-721 of 1 August 2003 Article 20 Official Gazette of 5 August 2003)
The professional and social situation of the beneficiary of the business-plan support contract is determined by
Articles L. 783-1 and L. 783-2 of the Labour Code.
The supporting legal entity is liable in regard to third parties for any damage caused by the beneficiary as a
consequence of the support and preparation programme referred to in Articles L. 127-1 and L. 127-2 prior to the
registration referred to in Article L. 127-4. After the registration, the supporting legal entity guarantees the liability
assumed under the support contract, provided that the beneficiary complied with the terms and conditions of the contract
through to its expiry.
Article L127-7
(inserted by Law No. 2003-721 of 1 August 2003 Article 20 Official Gazette of 5 August 2003)
The publication formalities for business-plan support contracts for the creation or takeover of a business activity and
the present chapter's other implementing measures are determined in a Conseil d'Etat decree.
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CHAPTER VIII
Concerning Incapacity to Practice a Commercial or Industrial Profession Articles L128-1 to
L128-6
Article L128-1
(inserted by Order No. 2005-428 of 6 May 2005 Art. 1 Official Journal of 7 May 2005)
No person shall, either directly or indirectly, for his own account or on behalf of another, engage in a commercial or
industrial occupation, direct, administer, manage or control a commercial or industrial venture or a commercial company,
in whatever capacity, if he has been the subject of a final judgement within the previous ten years:
1 For a crime; or
2 Has been sentenced to at least three months' imprisonment without suspension for:
a) An offence covered by Part I of Book III of the Penal Code or an offence covered by special laws punished with
the penalties imposed for fraud and breach of trust;
b) Handling stolen goods or an offence treated as handling stolen goods or similar thereto referred to in section 2 of
Chapter I of Part II of Book III of the Penal Code;
c) Money laundering;
d) Bribery or accepting or soliciting bribes, influence peddling, misappropriation and fraudulent conversion of
property;
e) Forgery, falsification of securities or other fiduciary instruments issued by the public authorities, falsification of
marks of authority;
f) Participation in an association of criminals;
g) Drug trafficking;
h) Procuring or an offence covered by sections 2 and 2 bis of Chapter V of Part II of Book II of the Penal Code;
i) An offence covered by Section 3 of Chapter V of Part II of Book II of the Penal Code;
j) A violation of the commercial companies legislation covered by Part IV of Book II of the present code;
k) Bankruptcy;
l) Making loans at usurious rates of interest;
m) An offence envisaged by the Act of 21 May 1836 prohibiting lotteries, or the Act of 15 June 1907 regulating
gaming in clubs and the casinos of seaside resorts, thermal spas and health resorts, or Act No. 83-628 of 12 July 1983
relating to games of chance;
n) An offence against the laws and regulations relating to foreign financial dealings;
o) Tax fraud;
p) An offence referred to in Articles L. 115-16 and L. 115-18, L. 115-24, L. 115-30, L. 121-6, L. 121-28, L. 122-8 to
L. 122-10, L. 213-1 to L. 213-5, L. 217-1 to L. 217-3, and L. 217-6 to L. 217-10 of the Consumer Code;
q) An offence referred to in Articles L. 324-9, L. 324-10 and L. 362-3 of the Labour Code;
3 Dismissal from functions as a public official or law official.
Article L128-2
(inserted by Order No. 2005-428 of 6 May 2005 Art. 1 Official Journal of 7 May 2005)
Persons engaged in an activity referred to in Article L. 128-1 who are convicted of an offence covered by that same
article must cease their activity within three months of the date on which the court's decision giving rise to incapacity to
conduct that business became final.
Article L128-3
(inserted by Order No. 2005-428 of 6 May 2005 Art. 1 Official Journal of 7 May 2005)
In the event of a final judgement being pronounced by a foreign court for an offence which, under French law,
constitutes a crime or an offence referred to in Article L. 128-1, the criminal court of the convicted person's domicile shall
declare, at the request of the public prosecutor and after verifying the correctness and legality of the conviction and
having duly heard the person concerned in closed session, that there are grounds for applying the incapacity referred to
in Article L. 128-1.
The said incapacity also applies to any non-reinstated person who is the subject of a disqualification order issued by
a foreign court which is enforceable in France. The application for an enforcement order may, in this specific