Two friends taking over a restaurant, three architects pooling their clients, a family buying a building together: in these projects, everyone knows who they are committing to, and that bond is exactly what French company law takes into account. The société de personnes, a partnership-type company, rests on trust between the partners far more than on the amount of their contributions.
This choice has a flip side: the partners answer for the debts with their personal assets, sometimes for the whole amount. This guide covers the definition, the forms set out in the Civil Code and the Commercial Code, each partner’s liability, the tax regime and the steps to set one up, with the rules as published by Service Public and Bpifrance Création.
Key points at a glance:
- Partnership-type companies are founded on the person of the partners (known as intuitu personae): the arrival of a new partner and the transfer of shares (parts sociales) require the agreement of the others.
- The main forms are the general partnership (société en nom collectif, SNC), the limited partnership (société en commandite simple, SCS), the civil company (société civile) and the unregistered partnership (société en participation).
- SNC partners are liable for the company’s debts without limit, jointly and severally; partners in a société civile answer in proportion to their share of the capital; the limited partners of an SCS only up to their contributions.
- By default, profits are taxed in the name of each partner under income tax (in an SCS, only the general partners’ share), with an option for corporation tax.
Société de personnes: definition
The starting point is Article 1832 of the Civil Code: a company is formed by two or more persons who agree, by contract, to commit property or their work to a common undertaking, in order to share the profit or benefit from the savings that may result. Once registered, it acquires legal personality (Article 1842): it has its own name, registered office and assets.
So what is a société de personnes? It is a company in which the person of each partner carries more weight than the capital they bring. To understand the definition, it is enough to follow this criterion to the end: since the partners chose each other, none of them can bring a stranger in their place without the others’ agreement, their rights take the form of shares (parts sociales) rather than stock (actions), and, in most forms, their liability does not stop at their initial stake.
How it differs from a capital company
The capital company (société de capitaux) follows the opposite logic. In a public limited company (SA) or an SAS, it is the contribution that makes the shareholder: shares can in principle be transferred freely, and shareholders’ liability is limited to the amount of their contributions. To set a société de personnes against a capital company, three questions are usually enough: who can join the company, which assets creditors can claim, and who pays tax on the profit. The table below sets out these differences point by point.
| Criterion | Société de personnes (SNC, SCS, société civile) | Capital company (SA, SAS) |
|---|---|---|
| Basis | Trust between the partners (intuitu personae) | The capital contributed |
| Securities held | Parts sociales | Shares (actions) |
| Arrival of a new partner | Partners’ agreement; in an SNC, unanimity for any transfer of shares | Share transfer free in principle, unless an approval clause applies |
| Partners’ liability | Unlimited (joint and several in an SNC, proportional in a société civile), except for SCS limited partners, limited to their contributions | Limited to contributions |
| Minimum capital | Set freely (€1 minimum according to Service Public for the SNC and the SCS) | At least €37,000 in an SA; set freely in an SAS |
| Default taxation | Income tax in the partners’ names (in an SCS, the general partners’ share; the limited partners’ share under IS), option for corporation tax | Corporation tax |
The main forms of partnership-type companies
French law recognises several sociétés de personnes. Two are commercial, the SNC and the SCS; one family falls under civil law, with the société civile and its variants; and two more exist without registration. Each société de personnes keeps the same foundation, but the protection of the partners varies a great deal from one to the next.
The general partnership (SNC)
The SNC is the archetypal form of the société de personnes. It brings together at least 2 partners, individuals or companies, who all have the status of trader (commerçant). The share capital is set freely in the articles of association, €1 minimum according to Service Public, through cash or in-kind contributions.
All partners are managers in principle, unless the articles entrust management to one or more of them, or even to an outside person. Any transfer of shares, even between partners, requires unanimous agreement: a partner can only leave the SNC if the others consent. On the social security side, every partner, manager or not, falls under the scheme for self-employed workers and the social security scheme for the self-employed.
The limited partnership (SCS)
The SCS combines two categories of partners, with at least one of each. The general partners (commandités) manage the company, have trader status and answer for the company’s debts without limit, jointly and severally, like the partners of an SNC. The limited partners (commanditaires) provide the funding: their liability is limited to the amount of their contributions.
This protection comes at a price set by Article L222-6 of the Commercial Code: a limited partner may not carry out any external act of management, even under a power of attorney. They keep a right of oversight, as they can consult the company’s books and documents twice a year and put written questions on its management.
The civil company (société civile)
The société civile hosts activities that are not commercial: managing real estate with the société civile immobilière (SCI), practising a regulated profession together with the société civile professionnelle (SCP). It has at least 2 partners; Bpifrance Création states that the law imposes no minimum capital on it.
Its particularity lies in liability: the partners answer for the debts without limit, but in proportion to their share of the capital and not for the whole. A creditor must first pursue the company, then turn to each partner for their own share only.
Société en participation and de facto company
The société en participation is not registered. It has no legal personality and rests solely on the contract between the partners, who act in their own name. When it is undisclosed, each partner alone is liable for their commitments towards third parties; when it is disclosed, the partners’ liability becomes unlimited, and joint and several if the activity is commercial.
Close to it, the de facto company formed between individuals (société créée de fait) arises without any expressed intention to form a company: the people involved have simply behaved, in fact, like partners. The Civil Code applies to it the rules of the société en participation (Articles 1871 to 1873).
SARL and EURL, hybrid forms
Is the SARL a société de personnes or a capital company? It borrows from both. On the capital side, its partners’ liability is limited to the amount of their contributions. On the personal side, a transfer of shares to a third party remains subject to the approval of a majority of the partners holding at least half of the shares. It is therefore often presented as a hybrid company, as is the EURL, its single-partner version.
Unlimited, joint and several liability of partners
The key notion is unlimited, joint and several liability. “Unlimited” means that the company debt is not capped at the amount of the contribution; “joint and several” means that a creditor can claim the whole debt from a single partner, who then turns to the others.
In an SNC, this principle has an important qualification: the obligation is subsidiary. Before pursuing a partner, the creditor must first turn to the company, and the Commercial Code requires a formal notice that has remained without effect (Article L221-1). In a société civile, liability remains unlimited but not joint and several, each partner being bound only up to their share of the capital (Article 1857 of the Civil Code), and the creditor must first have pursued the company without success (Article 1858).
The general partners of an SCS are exposed like SNC partners, while the limited partners risk only their contribution, unless they interfere in management. For a project that has to borrow or commit to large amounts, this difference often weighs more than the simplicity of the form.
Key takeaway: in an SNC, each partner can be pursued for the whole debt, after the company. In a société civile, each answers only for their share, and in an SCS only the general partners are bound beyond their contribution.
Tax regime of partnership-type companies
The tax regime of sociétés de personnes is, in principle, one of transparency: profits are not taxed at the level of the company, but in the name of each partner, according to their share, even when these profits are not distributed. For a partner who is an individual, this share is therefore declared in their name under income tax, unless the company opts for IS.
On the social security side, SNC partners and the general partners of an SCS fall under the scheme for self-employed workers, whether they are managers or not. The choice between transparency and IS is made case by case; a chartered accountant works out the difference from the expected result and each partner’s income.
Setting up a société de personnes in 4 steps
Setting one up follows the same route as for an SARL or an SAS, but some clauses need more attention, because the partners will stay bound together for a long time.
An SNC for a commercial activity between trusted partners, an SCS if some only provide funds, a société civile for a civil activity such as managing a property. The minimum number of partners is two in each case.
The articles set the capital and contributions, how shares are split, management, decision rules and the approval procedure for a new partner. In an SNC, any transfer of shares requires the unanimous agreement of the partners.
The application is filed on the business formalities portal (guichet des formalités des entreprises). Once the request is validated, the company is entered in the national business register (RNE) and in the trade and companies register (RCS).
Once registered, the company can open a business account in its own name, to keep its flows clearly apart from the partners’ personal accounts.
Pros and cons of a société de personnes
For a close-knit small team, the société de personnes offers a flexibility that capital companies do not always have. Here are its advantages and disadvantages, to weigh before the articles are signed.
In short: the société de personnes suits projects run by partners who know each other well and accept committing their assets. When the financial risk grows, the SARL or the SAS limit liability to contributions.
Vivid, a business account for partnership-type companies
An SNC or an SCS handles money with several people involved: partners’ contributions, supplier payments, splitting the results. Vivid, an electronic money institution, offers a business account shared between several team members. In the sign-up form, the SNC, the SCS and the SCP are among the accepted legal forms, alongside the SARL, the SAS or the SA, all on the General Business plans.
The account is opened in the company’s name once it is registered, with its registration number. Partners added as team members then follow spending and income, in the app as well as on the web platform.
Vivid at a glance: SNCs, SCSs and SCPs can apply online for a Vivid business account, with unlimited French IBANs and team members, from the Free Start plan at €0/month. Opening usually takes between 10 minutes and 1 hour.
Open your company’s business account
For a registered SNC, SCS or SCP, the Vivid business account is requested online, with French IBANs and the Free Start plan at €0/month.
Frequently asked questions
What is a société de personnes?
It is a company founded on trust between its partners rather than on capital. The partners hold shares (parts sociales), a third party can only join with their agreement, and their liability generally goes beyond their contributions. The SNC, the SCS, the société civile and the société en participation are its main forms.
Is the SARL a société de personnes?
Not entirely. The SARL limits its partners’ liability to their contributions, like a capital company, but it makes the transfer of shares to a third party subject to the partners’ approval, like a société de personnes. It is therefore considered a hybrid form.
Is there a minimum capital?
A token amount is enough. In an SNC or an SCS, the partners set the capital freely, from €1 according to Service Public. For the société civile, Bpifrance Création states that the law imposes no minimum or maximum amount.
How many partners are needed?
At least two. The SNC and the société civile have at least 2 partners; the SCS also brings together at least 2, including one general partner and one limited partner. In an SNC as in an SCS, the partners can be individuals or companies.
Who runs a société de personnes?
One or more managers. In an SNC, all partners are managers in principle, unless the articles appoint one or more partners or a third party. In an SCS, the manager cannot be a limited partner, who carries out no external act of management but keeps a right of oversight over the accounts.
Can a partner sell their shares freely?
In an SNC, no: any transfer of shares, even to another partner, requires the unanimous agreement of the partners. In an SCS and a société civile, a transfer also requires the partners’ approval, under the conditions set by law and the articles.
Can a société de personnes opt for corporation tax?
Yes. The SNC and the société civile are subject by default to income tax in the partners’ names, the SCS only for the general partners’ share; all of them can opt for corporation tax. The amounts distributed can then be taxed in the partners’ names as dividends.
This article is provided for general information and does not constitute legal, tax or social security advice. The rules cited are those published by Légifrance, Service Public and Bpifrance Création; the choice of a company form is best confirmed with a chartered accountant or a lawyer. Payment services are provided by Vivid Money S.A., an electronic money institution authorised by the Commission de Surveillance du Secteur Financier (CSSF) in Luxembourg, whose branch in France is supervised by the Autorité de contrôle prudentiel et de résolution (ACPR).
