Corporate Law Firm: Structuring Companies With Their Tax Consequences in View
Alphard Law advises founders, directors and shareholders on the incorporation, governance and development of their companies, with the same conviction that guides our transactional work: constitutional and capital choices carry lasting tax consequences, often greater than their immediate legal significance. The firm combines a dedicated tax practice, led by Antoine Gouin and Hugo Marchadier, with a corporate practice led by Galina Petrova, partner, business lawyer at the Paris Bar.
What corporate law decides, tax law invoices
The corporate form determines the regime under which profits are taxed and the social security status of the director. The allocation of share capital governs control thresholds, access to favourable regimes and the treatment of future transfers. The clauses of a shareholders' agreement, cross put and call options, exit clauses, liquidity mechanisms, produce tax effects when they are triggered, sometimes years later, and a clause whose legal drafting is impeccable may set off a tax charge nobody anticipated. Shareholder loan accounts, advances, related-party agreements and exceptional distributions call for the same cross-check. Our premise is never to draft a corporate document without having measured its tax consequence, for the company and for each shareholder.
Our work
Incorporation and choice of structure. Choice of corporate form and tax regime, including the election under Article 239 bis AB of the French Tax Code for young companies, drafting of articles of association, definition of the corporate office and the director's status, contributions in kind and their valuation.
Shareholders' agreements and governance. Drafting and negotiation of shareholders' agreements, management bodies, voting and economic rights, approval, pre-emption, tag-along and buy-back clauses, prevention and resolution of deadlock situations.
Capital transactions. Capital increases and reductions, issues of hybrid securities, BSPCE founder warrants and free shares in conjunction with our business and founder tax practice, investor entries, reorganisations of ownership.
Ongoing corporate housekeeping. Approval of accounts, shareholders' meetings, amendments to the articles, transfers of registered office, dissolutions and liquidations, filing formalities and maintenance of corporate registers.
Companies with international shareholders
The firm deals in particular with companies whose shareholders, directors or activities are spread across several countries: non-resident shareholders, directors operating from abroad with the permanent establishment risk that entails, foreign holding companies owning French subsidiaries, French-foreign groups. These configurations, which fall within our international tax practice, call for particular care when drafting articles and shareholders' agreements, because what is neutral for a French shareholder may prove expensive for one established elsewhere.
Our method
We draft documents after costing their consequences, not the other way round, and we record the choices made in a written memorandum delivered to the shareholders, which retains its value as the company develops or changes hands. The firm's partners draft themselves, without delegation, which suits structures whose governance leaves no room for approximation: founder-led companies, family businesses, companies with international shareholders or with capital open to investors.
Frequently asked questions
Why have a tax firm draft my articles of association?
Because the articles determine lasting tax parameters: the regime under which profits are taxed, the social and tax status of the director, the treatment of distributions, and the conditions for accessing favourable regimes on future transfers. Articles that are legally correct but poorly calibrated for tax work perfectly well until the day they prove expensive, at the first significant distribution, on the entry of an investor or on a sale. A cross-check at drafting stage avoids later corrections, which are always costlier.
SAS or SARL: how to choose?
The two forms diverge on three fronts that must be examined together: freedom of drafting, very wide in an SAS and constrained in an SARL; the director's social security status, treated as an employee in an SAS but as a self-employed worker for the majority manager of an SARL, with different costs and entitlements; and the treatment of distributions, dividends paid to an SARL majority manager being partly subject to social security contributions. The choice depends on the project, the number of shareholders, the level of remuneration sought and the exit horizon.
Does a shareholders' agreement have tax consequences?
Yes, and they are frequently overlooked. Put and call options, buy-back clauses, ratchet and liquidation preference mechanisms produce their tax effects when triggered, and their drafting can shift a gain from the capital gains regime into the employment income regime, particularly in management packages. The agreement must be drafted with that future trigger in mind.
One of my shareholders lives abroad: does that change anything?
Yes, on several fronts: the treatment of distributions paid to them and the withholding taxes applicable subject to treaty relief, the consequences for them of a future sale of their shares, and, where they exercise management functions from abroad, the risk that the company is found to have a permanent establishment in their country of residence. These points should be anticipated in the articles and the shareholders' agreement, not discovered at the first distribution.
Do you handle ongoing corporate housekeeping?
Yes: approval of accounts, shareholders' meetings, amendments to the articles, filings and corporate registers. We do so principally for companies whose tax affairs or transactions we also handle, that continuity being precisely what allows us to spot, over the life of the company, the decisions whose tax impact warrants a considered choice.
Are you incorporating, restructuring or developing your company? Contact Alphard Law for a confidential initial discussion.