In a ruling dated June 18, 2025, the French Cour de cassation clarifies that compliance with the legal procedures provided for by French corporate law is the only mean of securing the retroactive adoption of pre-incorporation acts as of their original date, once the company has been duly registered. The mere inclusion of a substitution clause in the relevant contracts is insufficient to produce this effect.
A newly formed company acquires legal personality only upon its registration in the Trade and Companies Register (Registre du commerce et des sociétés – RCS). From that moment, it is entitled to enter into contracts in its own name, independently of its shareholders. However, prior to registration, it is often necessary for a company to enter into agreements, whether to facilitate its formation (opening bank accounts, leasing premises, securing financing, etc.) or to avoid missing business opportunities (such as forming partnerships or concluding agreements with clients or suppliers).
In such circumstances, it is the founding shareholders, either directly or through their agents, who enter into these contracts. Under French law, individuals acting on behalf of a company in formation—prior to its acquisition of legal personality–are jointly and severally liable for the obligations incurred. However, they may be released from this liability if, once duly incorporated and registered, the company ratifies the commitments in accordance with the formalities prescribed by law. In that case, the ratified acts are deemed to have been concluded by the company from the outset.
In a ruling dated June 18, 2025,1 the French Cour de cassation clarifies that compliance with the legal procedures provided for by French corporate law is the only mean of securing the retroactive adoption of pre-incorporation acts as of their original date, once the company has been duly registered. The mere inclusion of a substitution clause in the relevant contracts is insufficient to produce this effect.
In the case at hand, a creditor sought to enforce a claim against a company based on a contract entered into during its formation period. The Court of Appeal held that the contract, signed with the director of the company in formation, had not been validly ratified upon registration, as the legal procedures governing the retroactive adoption of pre-incorporation acts had not been followed.
The French Cour de cassation upheld this decision and accordingly dismissed the appeal. The judges affirmed that adoption of an act concluded during a company’s formation period cannot stem solely from the mutual agreement or intention of the parties. Such adoption must strictly comply with the legal and regulatory provisions governing the procedures for adopting commitments made on behalf of a company in formation.
While the Cour de cassation has, in recent case law,2 relaxed the conditions for the admissibility of ratifiable acts—extending this to acts that do not expressly state they were concluded “in the name of” or “on behalf of” the company in formation—its decision of June 18, 2025 underscores that compliance with the legal adoption procedures remains essential to benefit from retroactive effect as of the date of the act. This decision stands in contrast to recent decisions by the Court,3 which appeared to allow the retroactive effect of substitution clauses, thereby prioritizing the parties’ intent over strict adherence to statutory retroactive adoption procedures.
The substitution clause may remain valid under general contract law but it does not enable the company to benefit from the retroactive adoption as of a date prior to its registration. Only the specific procedures set out in French corporate law permit such retroactive effect.
The procedures specific to corporate law are set out in Article 1843 of the French Civil Code and Article 6 of Decree No. 78-704 dated July 3, 1978 for civil companies, and in Articles L. 210-6, R. 210-5 et seq. of the French Commercial Code as well as Article 6 of the same decree for commercial companies.
Only contractual commitments undertaken in preparation for the business activity of companies in formation are eligible for retroactive adoption. Other forms of liability, such as those arising in tort, are excluded, as well as licences and administrative authorizations.
Although the 2023 ruling of the Cour de cassation above-mentioned relaxed the conditions for the admissibility of ratifiable acts, it is still recommended to expressly state in the contracts concerned that they are made “in the name and on behalf of” the company in formation.
Indeed, it must be demonstrated that the other party was fully informed and consented to contracting with a company in formation, and that the act would subsequently be adopted by said company. The main characteristics of the company in formation—such as its name, legal form, share capital, and registered office—should be specified in the contract to enable the other party to clearly identify the future legal entity.
French corporate law provides for three adoption procedures, depending on the timing of the contract’s conclusion:
Until the company is registered or the agreement is expressly ratified by a shareholders’ resolution, those who have signed, or have given mandate to the signing of, an agreement remain personally and jointly liable for the commitments undertaken. However, once the company is registered or the agreement is duly ratified, they are released from liability—unless a personal guarantee was explicitly granted—and the act is deemed to have been concluded by the company from the outset.
If the agreement is not ratifiable, or if none of the applicable adoption procedures have been properly followed, the shareholder(s) who entered into the agreement remain personally bound. They may face financial or legal consequences if they are unable to fulfill those obligations, unless they can demonstrate that the agreement was entered into in the name of a non-existent company.
