Introduction
Entreprise Unipersonnelle à Responsabilité Limitée (EURL) is a legal form of company in France that combines the features of a limited liability company with a single shareholder. The structure was created to provide entrepreneurs with a framework that protects personal assets while maintaining a relatively simple administrative and fiscal regime. It is a popular choice for sole proprietors who wish to separate their business operations from their personal finances without the complexity of a multi‑shareholder limited company.
Legal Context and Definition
Under the French Commercial Code, an EURL is a type of Société à Responsabilité Limitée (SARL) where the ownership is concentrated in one individual or legal entity. The shareholder can be a natural person, a company, or a partnership, but there must be only one. The legal personality of the EURL is distinct from that of its sole shareholder, meaning that the company can own property, enter contracts, sue and be sued in its own name.
The EURL is governed by the same statutes that apply to SARLs, with the specific restriction on the number of shareholders. Articles of association, capital contributions, and governance rules are drafted in accordance with French civil and commercial law. The legal status provides limited liability, so the shareholder’s personal assets are protected beyond the amount of capital invested, except in cases of fraud or negligence.
History and Evolution
The concept of limited liability companies in France dates back to the 19th century. The original Société à Responsabilité Limitée was established in 1834, allowing small businesses to operate with limited financial risk. Over the years, reforms expanded the flexibility and accessibility of the SARL form, particularly in the 1970s and 1990s, to accommodate modern entrepreneurial needs.
The EURL was introduced formally with the 1993 reform of company law, which permitted the creation of single‑shareholder SARLs. This move aimed to provide a simpler alternative to the Société par Actions Simplifiée (SAS) and to reduce administrative burdens for small entrepreneurs. Subsequent amendments in 2007 and 2017 streamlined incorporation procedures, adjusted capital requirements, and harmonized taxation policies to encourage the use of the EURL among micro‑entrepreneurs and start‑ups.
Formation Process
Prerequisites
To form an EURL, the founder must be a natural person or legal entity capable of entering contracts. The applicant must hold at least one share of the company, which can be acquired in cash, in-kind contributions, or by transferring assets. The minimum capital requirement has been set at a nominal amount, often symbolic, such as €1, but the founder may choose to invest more to demonstrate financial stability.
Documentation
The following documents are typically required for incorporation:
- Articles of Association outlining the company's purpose, capital structure, and governance.
- Proof of identity and residence of the founder.
- Statement of the initial capital contribution and its form.
- Declaration of compliance with statutory obligations, such as the lack of prohibited activities.
- Registration forms filed with the Centre de Formalités des Entreprises (CFE) or the local commercial court.
Registration
Once the documents are compiled, the founder must submit the application to the designated CFE. The CFE validates the paperwork, ensures compliance with statutory requirements, and forwards the case to the local tribunal for publication in the Bulletin Officiel des Annonces Civiles et Commerciales (BODACC). Upon successful registration, the company receives its registration number (SIREN) and is legally recognized.
Capital and Financing
Initial Capital
The initial capital can be contributed in cash or in-kind. While the law permits a nominal amount, practical considerations often drive founders to invest a larger sum to cover startup costs, secure bank credit, and signal market confidence. The capital is fully paid up at incorporation, and shareholders have no further liability beyond this amount.
Capital Flexibility
Capital adjustments can be made after formation through additional share issuance, share buybacks, or conversion of loans into equity. However, such changes require shareholder approval, amending the articles of association, and filing the modifications with the appropriate authorities. Because an EURL has only one shareholder, these procedures are streamlined compared to multi‑shareholder entities.
Funding Options
Beyond personal investment, an EURL may obtain financing through banks, venture capital, or public subsidies. Because the company has a legal personality, it can enter into loan agreements, issue bonds, and receive grants. The limited liability structure may also make it more attractive to investors who seek clear boundaries between personal and corporate obligations.
Governance and Management
Roles and Responsibilities
The sole shareholder holds ultimate authority over the company’s strategic direction. However, the day‑to‑day management is typically delegated to a manager (gérant). The manager can be the shareholder themselves or an appointed third party. The manager bears fiduciary duties, including compliance with statutory obligations, accurate accounting, and prudent financial management.
Decision-Making Process
Major decisions such as capital increases, changes to the company’s purpose, or dissolution require formal approval by the shareholder. For routine operational matters, the manager operates with delegated authority, subject to the limits set in the articles of association. Because there is only one shareholder, decision-making is generally faster, but the manager must still maintain transparency and accurate documentation.
Reporting Requirements
Annual financial statements must be prepared and filed with the local tribunal. The statements include a balance sheet, income statement, and notes. Depending on the company’s size, the reports may be audited or exempt from audit. The manager must also file an annual tax return and pay any applicable social contributions.
Taxation and Accounting
Corporate Income Tax
An EURL is subject to corporate income tax (Impôt sur les Sociétés, IS) on its taxable profits. The standard corporate tax rate applies, with a reduced rate for small enterprises under certain thresholds. The founder can elect to be taxed under the regime of a “mini‑entreprise” or “micro‑entreprise” if the company meets specific revenue limits, thereby simplifying tax compliance.
Income Tax for Shareholder
Profits distributed as dividends to the sole shareholder are taxed at the shareholder’s personal income tax rate, subject to a social contribution. Alternatively, the shareholder can retain earnings within the company, allowing them to accumulate funds for future expansion or reinvestment.
Social Contributions
The manager of an EURL is considered a “chef d’entreprise” for social security purposes. Consequently, the manager must contribute to the general social security system, including health, pension, and family allowances. The contribution rates depend on the manager’s remuneration and the company’s turnover.
Accounting Standards
French GAAP applies to all companies, but small EURLs may opt for simplified accounting methods. The company must maintain a journal, ledger, and inventory records. Auditing requirements depend on turnover, employee count, and capital, with many small EURLs exempt from audit.
Liability and Risk
Limited Liability
The primary advantage of the EURL is limited liability. The shareholder’s exposure is limited to the capital contributed, except in cases of fraud or negligence. This protection encourages entrepreneurship by reducing personal financial risk.
Personal Guarantees
Despite limited liability, the founder may be required to provide personal guarantees for loans or contractual obligations, especially in the early stages when the company’s creditworthiness is low. These guarantees can expose personal assets to risk.
Compliance Obligations
Failure to comply with statutory duties, such as accurate accounting or timely filing of documents, can result in penalties, suspension of operations, or personal liability for the manager. The legal framework imposes strict obligations on the manager to prevent misuse of the limited liability structure.
Advantages
- Simple formation with a single shareholder.
- Limited liability protects personal assets.
- Flexible governance with the possibility to appoint an external manager.
- Potential tax benefits for small companies.
- Reduced administrative burden compared to multi‑shareholder entities.
- Access to banking and financing under a legal personality.
Disadvantages
- Limited capital raising options compared to corporations with multiple shareholders.
- Potential personal guarantees may expose personal assets.
- Limited appeal to certain investors who prefer established corporate structures.
- Social security contributions for the manager can be substantial.
- Regulatory compliance still requires diligent record‑keeping.
Comparisons with Other French Entities
Versus SARL
A SARL may have multiple shareholders, which allows for shared capital and broader risk distribution. However, the governance structure can be more complex. The EURL offers similar legal protections but simplifies the process for sole proprietors.
Versus SAS
The SAS (Société par Actions Simplifiée) provides greater flexibility in share structure and governance, allowing a wide range of shareholder rights. The SAS can also be a single‑shareholder entity, but it generally requires more complex administration and potentially higher tax obligations. The EURL is often chosen for its lower administrative and fiscal complexity.
Versus Auto‑entrepreneur
The auto‑entrepreneur regime is tailored for micro‑entrepreneurs with simplified taxation and minimal social contributions. However, it lacks a separate legal personality and limited liability. The EURL offers a more robust legal framework for entrepreneurs who anticipate growth or who require a distinct corporate identity.
International Equivalents
Many jurisdictions have similar single‑shareholder limited liability structures:
- In the United Kingdom, the “Sole Proprietorship Limited” or “Limited Liability Company (LLC)” can be established with a single member.
- In the United States, the “Single‑Member Limited Liability Company” provides analogous benefits.
- In Germany, the “Einzelunternehmergesellschaft (haftungsbeschränkt)” is a comparable form.
- In Canada, the “Sole Proprietor Limited” is an option in certain provinces.
These entities share the core principles of limited liability and single ownership, though statutory details differ across countries.
Common Use Cases
- Professional services, such as consulting or legal practice, where a single practitioner seeks liability protection.
- Small retail or online businesses that anticipate modest revenue and prefer a simple corporate structure.
- Tech start‑ups in early stages that require legal personality to secure seed funding or intellectual property rights.
- Freelancers who want to separate business income from personal finances for tax optimization.
- Family businesses where a single generation intends to maintain control while limiting risk.
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