Category: Governance

Must all companies prepare a management report?

As a general rule, all French business companies are required to prepare a management report. However, limited liability companies (Société à responsabilité limitée – SARL) and simplified joint-stock companies (Société par actions simplifiée – SAS) qualifying as micro or small businesses are exempt from this requirement.¹ These exemptions apply to companies that do not exceed two of the following three thresholds at the end of the financial year:

	Balance sheet total	Net turnover	Average workforce
Micro-business	EUR 450,000	EUR 900,000	10 employees
Small business	EUR 7.5 million	EUR 15 million	50 employees

This exemption is not available to certain companies, especially those operating in the banking, financial or insurance sectors.² Furthermore, the bylaws may provide for the preparation of a management report, even where the applicable thresholds are not met.

Who is responsible for drafting the management report?

The management report is prepared by the general manager(s) in a SARL and by the president in a SAS. In SAS companies, the bylaws may further require the involvement of general directors and other governance bodies (e.g., a strategic committee or a board of directors).

When must the management report be prepared? Are there statutory deadlines?

The preparation timeline is subject to several legal requirements:

Shareholders must approve the annual accounts within six months of the end of the financial year;
The report must be made available to the statutory auditor (if any) at least one month before the convening of the general meeting;³
It must be communicated to shareholders at least fifteen days prior to the annual general meeting;⁴
Similar timelines are generally recommended where decisions are adopted by unanimous written consent.

In principle, the report is prepared once the financial statements are available. In practice, the closing process is often time-consuming and typically completed only after three to four months.

The report should therefore be prepared in parallel, based on available information, to ensure compliance with applicable deadlines. Close coordination among all stakeholders (internal teams, legal counsel, accountants and, where applicable, the statutory auditor) is key.

> Also read on this topic: « Annual Accounts Approval in French Companies: What Information Must Be Disclosed? »

What is the content of the management report?

The law prescribes the mandatory content of the management report for both SAS and SARL companies.⁵ Additional disclosures may be required under the articles of association, any shareholders’ agreement, or the company’s internal practices.

In practice, the level of detail will vary depending on the shareholding structure, the nature of the business and the company’s scale of operations. Consistency in the level of disclosure from year to year is generally recommended, unless justified by a change in circumstances.

Review of the company’s situation during the past financial year

This section should provide a fair and comprehensive analysis of the company’s business performance, results and financial position, including, in particular, its level of indebtedness. It should also highlight the key events that affected the company during the financial year, whether from a financial or commercial standpoint. This includes, for example, developments impacting the markets in which the company operates, as well as transactions that have materially affected its legal or economic structure (such as capital transactions or financing arrangements).

The report should also address the company’s expected future development and any significant events occurring between the end of the financial year and the date of preparation of the report.

Research and development activities

Where applicable, the report should describe the company’s research and development activities, including key projects, their objectives and allocated budgets, as well as any results achieved or expected and any other relevant information.

Information on shareholders, subsidiaries, and branches

The report must list subsidiaries, equity interests and branches, and disclose any related transactions, in particular acquisitions or disposals.⁶ It must also present the activities and results of subsidiaries within the meaning of Article L.233-6 of the French Commercial Code.

Key performance indicators

These indicators are intended to explain the development of the company’s business and performance. They may be financial and, where appropriate, non-financial.

With respect to financial indicators, the report should comment on the main metrics included in the annual financial statements and explain their evolution over the financial year.

Non-financial indicators are not legally defined as such and will depend on the nature of the company’s activities. They may include, for example, human resources data (such as headcount, internal equality or anti-discrimination policies, where applicable), as well as the company’s social or environmental commitments (e.g. sponsorship activities). The nature and level of detail of such indicators vary significantly from one company to another.

It should be noted that companies whose securities are admitted to trading on a regulated market and which meet the criteria of “large businesses” are subject to more detailed non-financial reporting obligations, resulting from the Corporate Sustainability Reporting Directive (CSRD).⁷ For other companies, including SAS and SARL, these requirements will be introduced progressively from the 2027 financial years, subject to potential regulatory developments currently under discussion.

> Also read on this topic: « Corporate Sustainability Reporting & Due Diligence: Impact of the “Stop the Clock” Directive »

Other information

In addition, the management report must include certain specific disclosures, such as:

the amount of dividends distributed in respect of the previous three financial years;⁸
the total amount of non-deductible and “luxury” expenses;⁹
cross-shareholdings and share buyback programs;
any sanctions imposed by the Competition Authority for anti-competitive practices;
the amount of loans with a term of less than three years granted by the company to micro, small or bid-sized businesses;
information relating to payment terms of suppliers and customers;
identification of the main risks affecting the company and the strategy implemented to address them;
for companies meeting the criteria of “large businesses”, identification of essential intangible resources and the company’s dependence thereon;
details of the use of financial hedging instruments and the risks to which the company is exposed;
for SAS employing, at the end of two consecutive financial years, at least 5,000 employees within the company and its French subsidiaries or at least 10,000 employees worldwide: the vigilance plan;
for companies carrying out polluting activities or activities presenting risks to public health and safety (facilities classified as “Seveso seuil haut”): details of risk prevention policies and of the company’s ability to cover its civil liability in the event of an accident.

What are the sanctions for failure to present a management report?

The failure to prepare a management report, or the submission of an incomplete report, may give rise to significant consequences for both the company and its officers.

In an SARL, such failure may result in the nullity of the resolutions approving the financial statements.¹⁰ A similar risk exists in an SAS under the new regime governing the nullity of corporate decisions, as the rules relating to the management report may arguably be regarded as “mandatory provisions of corporate law”.

> Also read on this topic: « Enhancing Legal Certainty: Reform of Corporate Nullities under French Law »

In addition, the general manager of an SARL, as well as the president of an SAS, may be subject to criminal penalties of up to two years’ imprisonment and a fine of EUR 9,000.¹¹ Finally, their civil liability may also be engaged, allowing for compensation to be sought in respect of any resulting loss, as applicable.

We secure the legal compliance of your corporate decisions and of your annual accounts approval.

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[AGM 2026] Annual Accounts Approval in French Companies: What Information Must Be Disclosed to Shareholders and Third Parties?

Posted on 23 April 202627 April 2026 by Mathieu

Alkeom Avocat - Approbation des comptes annuels startup PME ETI France information associés et actionnaires

What information must be provided to shareholders called to approve the company’s annual accounts?

In French limited liability companies (société à responsabiltié limitée – SARL), the list of documents is provided by law: the management report, the company’s assets and liabilities statement (inventaire), the annual accounts, the draft resolutions, the statutory auditor’s report, or the consolidated accounts, when applicable.¹

These documents must be sent at the same time as the notices of meeting.

> Also read on this topic: « Convening Shareholders and Organizing the Annual General Meeting »

In French simplified joint-stock company (société par actions simplifiée – SAS), shareholders’ information rights are governed by the bylaws, subject to the mandatory disclosure of the annual accounts and certain reports required by law (see below). In the absence of specific provisions in the bylaws, it is for the President to take the necessary steps to ensure that shareholders are provided, in due time, with the relevant information required to make an informed decision on the approval of the annual accounts. It is generally considered good practice to refer to the rules and timelines applicable to SA or SARL companies, subject to appropriate adjustments to reflect the specific circumstances of each SAS.

We secure the legal compliance of your corporate decisions and of your annual accounts approval.

What are the annual accounts / financial statements submitted to the shareholders’ approval? How are they prepared?

The annual accounts / financial statements submitted to the shareholders are established by the company’s legal representative (assisted by his accounting teams / advisors), i.e. the general manager of the SARL or the president of the SAS. They consist of the following elements:

The balance sheet (bilan), which separately describes the company’s assets and liabilities;
The income statement (compte de résultat), which summarizes the income and expenses for the financial year;
The schedule (annexe), which completes and comments on the information provided by the balance sheet and the income statement.

However, this content may vary depending on the size of the company. For instance, micro-businesses are exempt from preparing notes. “Small businesses” may adopt their accounts using a simplified presentation. Finally, medium-sized businesses may adopt a simplified presentation for their income statement only.

> Also read on this topic [External link]: « Accounting Requirements for French Companies »

What reports must be prepared?

Where applicable, the following reports must be prepared by the legal representative of the company:

Management report from the company’s legal representative (general manager or president);
Report on related-party agreements;
Consolidated accounts and group management report (see below);
Report on stock options and free shares granted to employees and corporate officers of an SAS (SAS only);
Supplementary report by the SAS president on share capital increases involving a delegation of competence or powers (SAS only);²
Supplementary report by the SAS president in the event of a delegation of power to specifically name the beneficiaries of a share capital increase with waiver of preferential subscription rights (this report must be certified by the statutory auditor, if any) (SAS only).³

When should consolidated accounts be prepared? Do they have to be approved also?

Pursuant to Article L.233-16 of the French Commercial Code, when a company exercises exclusive or joint control over one or more other companies, it must prepare consolidated accounts as well as a group management report.

The group management report includes information similar to the information found in each company’s management report, but at group’s level. Thus, it should outline the situation of the group of companies, the foreseeable evolution of results and activities, a list of branches, and a description of the main risks and uncertainties facing the group.

While consolidated accounts and the related management report are essential information for shareholders, they are not subject to formal approval. The decision to approve the accounts relates only to the financial statements specific to each entity considered.

What information must be provided to third parties that are not shareholders?

The statutory auditor of the company, where one has been appointed, benefits from enhanced information rights. The annual accounts, the management report and, if applicable, the consolidated accounts and the group management report are made available to the statutory auditor (or communicated by email upon request) at least one month before the convening of the shareholders to approve the company’s annual accounts.⁴ More broadly, he must receive the information sent to the shareholders under the same conditions. Failure to communicate such information is a criminal offense punished by five years’ imprisonment and a fine of €75,000.⁵

In companies with at least 50 employees, the works council also has specific information rights. The employer must provide it with the documents communicated to the shareholders, including the annual accounts, the management report, and the statutory auditor’s reports.⁶

Finally, specific information rights benefit the holders of securities issued by SAS companies, even if they are not shareholders:

Holders of securities giving access to capital (warrants, convertible bonds…) have a right to receive the corporate documents sent to shareholders.⁷ Furthermore, representatives of the holders’ assemblies may attend general meetings, but they do not have any voting rights.
Regarding bondholders, only the representatives of the bondholders’ assembly have a right to receive the documents made available to shareholders.⁸ These representatives also have a right of attend general meetings without any voting right.

What is forward-looking reporting, and which companies are required to prepare it?

Certain companies are required to prepare so-called “forward-looking reporting documents”. While the annual accounts and the management report reflect the company’s past performance, this reporting is intended to provide an overview of its expected future position and outlook.

This documentation includes a statement of liquid assets and current liabilities, a cash flow statement, a projected income statement, and a projected financing plan.

This requirement applies to commercial companies which, at the end of a financial year, either employ more than 300 employees or generate net turnover in excess of EUR 18 million.⁹

The forward-looking reporting documents must be prepared within four months of the opening of the financial year and subsequently communicated, within eight days, to the statutory auditor, the Social and Economic Committee (Comité social et économique – CSE), and, where applicable, the supervisory board of the SAS. There is no statutory requirement for such documentation to be communicated to shareholders or to be included in the management report.

We secure the legal compliance of your corporate decisions and of your annual accounts approval.

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[AGM 2026] How to Organize the Annual General Meeting in French Companies and to Convene the Shareholders?

Posted on 23 April 202623 April 2026 by Mathieu

Alkeom Avocat - Approbation des comptes annuels PME ETI France Assemblée générale

What is the annual general meeting of a French business company?

The term refers to the general meeting of the shareholders of a French simplified joint-stock company (société par actions simplifiée – SAS) or a limited liability company (société à responsabilité limitée – SARL), called each year to decide on the approval of the accounts of the last ended financial year and the allocation of the result. By extension, it refers to these annual decisions when they are taken by unanimous written consent of the shareholders or by a sole shareholder.

We secure the legal compliance of your corporate decisions and of your annual accounts approval.

What is the typical agenda of the annual general meeting?

The general meeting opens with the reading, by the company’s legal representative (president of the SAS or general manager of the SARL), of the various reports to the shareholders [see Q&A no.3]. Then, the agenda of the decisions is usually organized as follows:

Approval of the accounts of the last ended financial year and discharge (quitus) to the legal representative for his management, as well as to the statutory auditors, if any;
Decision on the allocation of the result;
Approval of related-party agreements;
Mandates renewal / appointment of corporate officers and statutory auditors;
Determination of corporate officers’ remuneration;
Approval of the global amount of sumptuary expenses and charges (dépenses somptuaires);
Decisions relating to the recapitalization of the company in the event of equity being less than half of the share capital;¹
Other decisions (ratifications, authorizations…) in accordance with the bylaws, the shareholders agreement, and the practices in force within the company.

Is it mandatory to convene the shareholders in general meeting to vote on the annual accounts approval? Are there other ways for decision-making?

By principle, the shareholders of a French company may take their decisions through several means:

Meeting in a general meeting, physically or remotely, through electronic means allowing for the authentication of participants;
Organizing a written consultation;
Having each shareholder sign a private deed recording their unanimous decisions (“unanimous consent”).

The choice between these different means of decision-making will depend on the practices and challenges at stake in each company. The unanimous consent is interesting for its efficiency, even more with electronic signatures that are now recognized. However, it is unsuitable when unanimity cannot be reached. The convening of a general meeting gives place for real discussions between shareholders on the decisions to be taken, especially when points of view are not aligned. Between both, the written consultation, which is more burdensome, allows for non-unanimous decision-making when it is not possible to gather the shareholders together for any reason.

In an SARL, it used to be mandatorily required to convene shareholders in general meeting to decide on the annual accounts’ approval. However, for the sake of simplification, it is now authorised to take such decisions by written consultation or by unanimous consent, provided that the company’s bylaws authorize it.² An update of the bylaws in this respect is therefore necessary. In all cases, a minority of shareholders may request a general meeting to be held.

Concerning SAS, the form of decision-making is freely determined in the bylaws.³

How to approve annual accounts in a sole shareholder company?

It is the responsibility of the president of the SAS or general manager of the SARL to establish the accounts and submit them for the approval of the sole shareholder within 6 months. While information deadlines are generally more flexible in the case of a sole shareholder, certain constraints may arise, such as the following:

If the company is a 100% owned subsidiary part of a wider group of companies, accounts approval by the sole shareholder may be subject to internal governance decisions at the parent level, whose calendar must be taken into account;
Third parties (statutory auditors, works council…) must be provided with the mandatory information within the deadlines provided by law.

Finally, it should be noted that a simplified process exists when the sole shareholder is also the legal representative of the company. The annual accounts approval may result from the filing with the Trade and Companies Register of the statement on assets and liabilities (inventaire) and the annual accounts duly signed. A formal corporate decision is not necessary in such case.⁴

How to convene shareholders to the annual shareholders general meeting?

The convocation of shareholders to a general meeting is sent by the manager of the SARL or by the president of the SAS (unless otherwise provided in the bylaws).

In a SARL, convocations must be sent at least fifteen days in advance, by letter or electronic mail (registered with acknowledgment of receipt). They must include all the information required by law: annual accounts, management report, other documents [See Section 3], as well as the agenda and the text of the resolutions submitted to the shareholders.⁵

In a SAS, the rules are provided in the bylaws.

Should the management fail to convene the shareholders in accordance with mandatory rules, convocation may be made by the statutory auditor if there is one, or by a special representative designated by the President of the Commercial Court, at the request of any shareholder.

Finally, if the shareholders are called to decide by unanimous consent, it is necessary to refer to the bylaws. In any case, the information related to the decisions to be taken should be provided to them within a sufficient timeline to allow a reasonable review.

Who must be convened or admitted to the general meeting?

Individual convocations must be sent to each shareholder (i.e. holders of company’s shares). In the event of co-ownership (indivision) of shares or split of ownership (démembrement), each co-owner (indivisaire) as well as the bare owner (nu-propriétaire) and the usufruct holder (usufruitier) must be convened.

Furthermore, other stakeholders must also be convened to the general meeting (without any voting right):

The statutory auditor, when it has been appointed;
Two members of the works council, when it has been established;
Bondholders and securityholders representative.

In the event of unanimous written consent or decisions of the sole shareholder, such non-shareholder third parties must be informed in accordance with the provisions set out in the bylaws.

How are shareholders’ decisions taken at the annual general meeting?

The rules governing the approval of the annual accounts at the shareholders general meeting differ depending on whether the company is a French SARL or a SAS.

In a SARL, the rules applicable to ordinary resolutions apply:

Resolutions are adopted by a majority of the shares;
If no majority is reached in the first meeting, a second meeting must be convened and the resolution is then adopted by a majority of the votes cast, regardless of the number of shareholders voting.

Nonetheless, the bylaws may adjust these majority rules and/or introduce quorum requirements (i.e., a minimum number of shareholders required to be present or represented at the meeting).

In a SAS, the company’s bylaws freely determine the applicable majority rules and, where relevant, quorum requirements. The only limitation is that they may not provide for a majority lower than a simple majority of the votes cast.

Who has the voting rights in the event of shares’ ownership split?

In case of shares’ ownership split (démembrement de propriété), both the bare owner (nu-propriétaire) and the usufruct holder (usufruitier) have the right to participate in the general meeting.

However, the voting rights are allocated depending on the type of decisions to be taken. In principle, they belong to the bare owner.⁶ By exception, it belongs to the usufruct holder for decisions relating to the allocation of profits.

What documents must be filed with the Commercial Court?

It is mandatory for both the SAS and the SARL to file certain documents with the clerk of the Commercial Court within one month following the approval decision: the annual accounts, the consolidated accounts (if any), the statutory auditor’s report, and the decision on the allocation of the result.

These documents are published in the Trade and Companies Register. Confidentiality may be requested under certain conditions by micro-businesses and small businesses, and a publication of simplified information may be requested for medium-sized businesses.

Finally, the management report does not have to be filed, but it must be held at the disposal of any person who requests it.

We secure the legal compliance of your corporate decisions and of your annual accounts approval.

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Articles L.223-42 (SARL) and L.225-248 (SAS), French Commercial Code (FCC) ↩︎
L.223-27, FCC ↩︎
L. 227-9, FCC ↩︎
L. 223-31 and L. 227-9, FCC ↩︎
R. 223-18 and R.223-20, FCC ↩︎
Art. 1844, French Civil Code ↩︎

[AGM 2026] Annual Accounts Approval: What are the Key Obligations for French Business Companies?

Posted on 15 April 202623 April 2026 by Mathieu

Alkeom Avocat - Approbation des comptes annuels SARL SAS PME ETI

As the season of annual general meetings is in full swing, we propose a series of articles to help managers and shareholders of French business companies (SAS and SARL) better understand the rules governing the approval of annual accounts, as well as the obligations arising from them. First round of Q&As.

What does the approval of the annual accounts involves under French law?

Each year, shareholders must meet in an annual ordinary general meeting to approve the financial statements for the previous financial year. More broadly, they must rule on the management of the company by its executives, the allocation of the result (profit or loss), and, where applicable, the distribution of dividends.

In French limited liability companies (société à responsabilité limitée – SARL) and French simplified joint-stock companies (société par actions simplifiée – SAS), the process follows a common framework while still allowing for some differences, mainly due to the contractual flexibility specific to SAS.

We secure the legal compliance of your corporate decisions and of your annual accounts approval.

What is the purpose of approving annual accounts?

The approval of accounts serves a dual purpose.

From a financial perspective, it allows shareholders to rule on the annual accounts prepared by the legal representatives (president or general manager) and to decide on the allocation of the financial year’s result.¹ If there is distributable profit, they may decide to pay dividends, either spontaneously or in accordance with provisions set out in the articles of association or a shareholders’ agreement (minimum dividend, preferred dividend, etc.).

From a governance perspective, it is a key moment for informing shareholders and exercising their political rights (renewal of mandates, approval of major decisions, etc.).

Who is responsible for organizing the process?

In a SARL, the general manager is responsible for both preparing the annual accounts and organizing the entire approval process. In an SAS, the burden is on the president. However, the articles of the SAS may provide that certain responsibilities (such as convening shareholders) fall under other bodies.

In both cases, a careful review of the articles of association and any shareholders’ agreements in force is recommended to check each party’s responsibilities and the absence of additional procedures. For example, it can be provided that the annual accounts of an SAS will have to be approved by a committee or a board before they are submitted to the annual meeting.

Failure to comply with applicable rules may expose company officers to civil or even criminal liability. Certain decisions may also be held null and void.

What is the deadline for an SARL or a SAS?

In SARLs, the general meeting called to approve the accounts must be held within six months from the end of the financial year.² This deadline may be extended by court order upon request.
Failing this, the public prosecutor or any interested party may apply for an injunction to convene the shareholders or for the appointment of a representative to do so.

In SAS with multiple shareholders, there is no express deadline provided by French law. However, dividends must be distributed within nine months of the end of the financial year.³ In practice, aligning with the six-month deadline is considered good governance and is widely followed. The articles often provide for this deadline, making it binding.

By contrast, where the SAS has a single shareholder, Article L. 227-9 of the French Commercial Code (FCC) provides that this shareholder must approve the accounts within six months following the end of the financial year.

What are the main steps in approving annual accounts?

The approval process generally includes four stages:

Preparation of the annual accounts by the company representative;
Preparation of reports for shareholders, including the management report and, where applicable, the statutory auditor’s report, to be provided to the shareholders and the works councils, where applicable;
Decision-making phase: shareholders’ decision, possibly preceded by the submission to governance bodies designated in the articles;
Legal formalities: filing the accounts with the Trade and Companies Register.

Contractual flexibility: points of attention for approving the SAS’ annual accounts

The SAS is characterized by broad contractual freedom regarding shareholder consultation.⁴ The articles of association notably determine:

The body competent to convene or consult shareholders;
The consultation procedures (physical / distance meeting, written consultation, unanimous decision);
The rules governing prior information.

However, this flexibility does not exempt compliance with fundamental principles of company law, including the shareholders’ information rights.

Approval of SARLs’ annual accounts is governed by stricter rules

Conversely, SARLs remain subject to a process framed by French law more strictly. As a general rule, the decision to approve the accounts must be taken by the shareholders meeting in an ordinary general meeting convened by the manager. However, since a reform in 2024, this principle has been softened. The company’s articles may now allow decisions to be taken by a written agreement reflecting the unanimous consent of the shareholders, aligning on the possibilities offered to SAS.

In any case, failure to comply with obligations relating to the submission of accounts for shareholder approval exposes the officers to sanctions specific to SARLs, particularly financial ones.⁵

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