Easing of requirements for the takeover of deeds executed by a company in the process of registration

published on 6 March 2024 | reading time approx. 1 minute

The thorny issue of the takeover of deeds executed by a company in the process of registration has just undergone a major development.

In the framework of three decisions handed down on 29 November 2023 (nos. 22-12.865, 22-18.295 and 22-21.623), the Cour de cassation (French Supreme Court) has eased in a most welcomed way the requirements for the takeover of deeds entered into during pre-incorporation period of the company (contract on account keeping, opening of a bank account, domiciliation contract, conclusion of a commercial lease, etc.).

Until now, the Court required that deeds and contracts entered into during the pre-incorporation period expressly contain the words “in the name of” (“au nom de”) or “on behalf of” (“pour le compte de”) the company "in formation" or be listed and attached to the articles of association to be signed, or even that a particular order be respected in the designation of the signatory (the natural person acting on behalf of the company in formation be mentioned before such company). If these formalities of takeover were not rigorously followed, the deed was null and void.

Pointing out that this solution, which ultimately meant that neither the company nor the individual could be held liable for the performance of the deed, could weaken companies at the start-up stage, the Cour de cassation decided that it would henceforth be up to the judge to take into account the common intention of the parties in order to analyze whether their intention was indeed to conclude the deed on behalf of the company, over and above the express wording of the deed. Thus, in the absence of such wording, any type of wording indicating that the company is interested in the deed, or external elements such as written or oral exchanges, may now be taken into account to link the deed to the company and thus avoid nullity. In addition, the Court ruled that even erroneous information (if the company finally registered had a different corporate form or a different number of shareholders from what had been stated in the deed in question) is no longer an obstacle to a valid takeover.

Finally, it is interesting to note that, in another recent ruling, the Court has also clarified the moment when a company ceases to be considered as a company in formation, holding that companies have legal personality as soon as they are registered (recorded in the Trade and Companies Register), even if they have not yet been assigned a SIREN number (ruling dated 29 October 2023, no. 22-16.463). Consequently, as this number is only used for identification purposes, even without the attribution of this number, the company is no longer a company in formation and can validly conclude legal transactions without the aforementioned formalism.