A French SAS that has no standing statutory auditor may still carry out a share capital increase by debt set-off. The French Commercial Code permits a notary to issue the certificate recording that the new shares have been paid up. The underlying transaction and claim must nevertheless be documented before a timetable can be agreed.

Can the SAS instruct a French notary?

Yes. Article L. 225-146 of the French Commercial Code provides for a certificate recording the payment for shares by setting off a liquid and due claim against the company. A notary may issue this certificate, which takes the place of the depositary’s certificate for the amount set off. The availability of this route does not depend on the SAS having a standing statutory auditor.

The certificate establishes payment for specified subscribed shares. It does not replace the corporate decisions or establish that funds have been transferred. The subscriber’s claim and its discharge by set-off must be supported by evidence.

The account statement in the absence of an auditor

The claim must be identified and its amount and repayment terms established. Article R. 225-134 of the Commercial Code addresses an account statement certified by the statutory auditor in the context of a société anonyme. Its application to a SAS without a standing auditor, and its relationship with the notarial certificate, require consideration in the particular file. The absence of an auditor does not remove the need to establish the claim’s balance and validity.

The company should provide an account statement, details of movements and agreements giving rise to the liability. A shareholder loan agreement, any blocking provision and the identity of the account holder may be material. An accountant may assist in documenting these points, but the accountant’s work is distinct from the statutory certificate recording payment for the shares.

A practical sequence

First, the company and its advisers establish the proposed issue: subscribers, shares, issue price and amount to be set off. The articles of association, other shareholders’ rights and the payment status of existing share capital are examined.

Next, corporate documents and accounting records are reconciled. The subscriber named on the subscription form must hold the relevant claim and its amount must cover the part of the price proposed for set-off. Resolutions, forms and account statement should reflect the same transaction.

Finally, a notary examines the final documents and accounting entries before deciding whether a certificate can be issued. The company and its advisers then arrange the remaining corporate, filing and publicity steps.

Do advisers have distinct roles?

The company’s lawyer may prepare resolutions and subscription forms, while its accountant documents the claim and entries. A notary examines the documents supporting the certificate the office is asked to issue. The Commercial Code also provides, in the circumstances laid down by law, for a statutory auditor appointed for this specific certificate.

The file should include the SAS articles, registration details, draft resolutions and subscriptions, account statement, underlying agreements and information about the existing paid-up capital. The office can then state which further documents are required and whether its assignment is limited to the certificate. See also the conditions applicable to the claim and the guide to documents to send to a French notary.