Public limited company (SA): functioning and specificities


The SA is the preferred social form for large corporations since it notably allows the search for capital by appealing to the public. Nevertheless, most SAs are unlisted companies, whose management is provided by a board of directors. What are its functions and specificities?

Presentation of the so-called classic SA (not listed)

The most widespread mode of operation remains the classic unlisted SA. Two shareholders are requiredto form such a company and there is no minimum share capital. Both natural and legal persons can be shareholdersof such a society.

The SA is marked by a strict functioning which is largely governed by the commercial code. Nowadays, apart from large corporations, companies prefer simplified joint-stock companies (SAS) which is also a capital company but which is marked by great freedom of operation, governed in large part by the statutes, resulting from the will of the shareholders. The flexibility of the statutes and the possibility of exercising with a single partner (namely the SASU) have largely contributed to competition with SAs.

Being a corporation, shareholders are responsible for their contributionthey are not liable for the social debt on their personal assets. It is subject to corporation tax (IS) automatically, even if the option for income tax is possible (IR), in compliance with certain conditions (turnover, number of employees, etc.).

The particularity of SAs is that it is possible to issue and trade securities on regulated financial markets. Thus, we oppose the classic SA, the SA cote, a form favored by large companies.

The particularities of listed SAs

With regard to the listed SA, the provisions governing its regime are set out in Articles L. 22-10-18 et seq. of the Commercial Code.

You need a minimum of 7 partners and 37,000 of capital to set up a listed SA. The securities exchanged for the share capital contribution are admitted to trading on regulated markets. The shares are tradable on these markets through the public offerwhich is why this mode of operation is favored by the largest companies.

The share capital subscribed in cash must be paid up to at least 50% on the day of subscription (i.e. minimum 18,500), the rest will be paid up within a period set by the Board of Directors or the SC if necessary, without however exceeding a period of 5 years maximum, counting from the registration of the company. Furthermore, the contribution shares are entirely free from their mission and the contribution in industry is not authorized.

Listed companies are subject to strict rules for admission to a regulated market. Indeed, it is necessary to respect a formal procedure governed by European law.

You must compile a dossier including a prospectus. It is first necessary to present a so-called basic document before the public presentation offer period and then a transaction note. This note contains various information such as the corporate form, the activity carried out, the breakdown of capital, the economic data, the number and nature of the securities offered, the timetable for the operation, the price elements or the terms of the introduction procedure.

Finally, the Autorité des Marchés Financiers (AMF), the regulated markets supervisory body, will validate or not the application.. Its mission is to ensure the proper functioning of the markets, in particular compliance with regulations.

For companies listed on the stock exchange, a registration document must be issued each year.presenting the organization, activity, financial situation, results and future prospects.

Modes of operation of the SA

The functioning of the SA results from a choice of management, between the board of directors (CA) or a dualistic functioning with the management board and the supervisory board (CS). In practice, the classic management model tends towards a single management body, the Board, made up of directors. The dualistic functioning is composed on one side of the executive board and on the other side of the members of the CS, two bodies which have different powers.

The classic SA with board of directors

The SA whose management is guaranteed by the CA is the historical mode of operation of the SA. One and the same body holds the executive power and the power of control.

The Board of Directors is a collegiate body which guides the company’s progress by deliberation of its members.. Regarding the members, it is made up of at least one chairman and directors. If necessary, a general manager and deputy general managers can also assist the chairman in his duties. It is also possible that one and the same person exercises these functions, namely the Chairman and Chief Executive Officer (CEO).

The Chairman is a natural person under the age of 65, appointed by the members of the Board. It determines the orientations of the company’s activity.

The Chief Executive Officer (CEO) is a natural person appointed by these same members or default by the chairman and he is not necessarily a member of the Board. His mission is to ensure the day-to-day management of the company and he represents it with regard to third parties..

Directors are appointed during the constituent general meeting or by ordinary general meeting. There are a minimum of 3 and a maximum of 18. The quality of shareholder is not required to be a director, except contrary statutory provisions. They can also be salaried.

Recently, the PACTE law has strengthened the weight of directors representing employees within large corporations. When the company is made up of at least 8 directors, there must be a minimum of 2 employee representatives among the members of the Board.

In principle, it is the Chairman of the Board who convenes the members for deliberation and sets the agenda. Directors representing more than one third party, as well as the Chief Executive Officer, may ask the Chairman to convene a meeting if there has been no meeting for more than 2 months.

Once united, Board members deliberate on the agenda, only if half of the members are present or represented, any clause to the contrary is deemed not written. Decisions are taken by majority, knowing that the voice of the president is predominant over the others.. They can participate and vote by electronic means in principle, provided that they allow their identification as well as their effective participation. Nevertheless, the decisions modifying the statutes are voted by a majority of 2/3 of the votes within the framework of an extraordinary general assembly.

The main mission of the Board is to determine the running of the company, ie the company’s current strategy and future prospects. It is also responsible for monitoring the decisions taken by the directors. In this sense, the Chairman or the Chief Executive Officer, where applicable, must communicate all documents and information deemed necessary by the directors.

It is also the Board of Directors who are responsible for appointing and dismissing the chairman, as well as the general manager and the general managers, if need be, and also setting their remuneration. Moreover, it authorizes or not the securities, endorsements and various guarantees, as well as the regulated agreements entered into with the directors of the company.

Additionally, he is responsible for present the management report, close the corporate accounts, propose the allocation of the result.

SA with management board

The functioning of the SA with a management board was instituted to avoid the gathering of all the functions in the hands of the CEO, and this since the law of July 24, 1966.

In the case of an SA with a management board, the operation is shared between two bodies. On the one hand, the executive board is tasked with exercising the executivenamely that its members vote on the decisions of the society.

On the other hand, the CS’s main mission is to controlnamely that it is responsible for checking the appropriateness and regularity of the decisions taken by the members of the executive board, or even the control of the company accounts.

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