Civil society at the IS or SAS: which vehicle for a holding company holding company shares?

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When a manager brings the shares of his company to a holding company, the choice of corporate form is often treated as a simple technical prerequisite. In reality, this choice structures the governance, the level of internal control and the exposure to risks. In so-called “passive” holdings, the simplified joint stock company (”SAS“) is frequently adopted by automation, without questioning the real adequacy of this form to the objective pursued and the resulting constraints.

To reason correctly, it is necessary to first rule out false tax debates and then to precisely analyze the legal and operational consequences of each structure.

Tax neutrality largely achieved in corporate tax holdings

Submission to the IRS: condition of tax deferral

In a scheme for the transfer of securities under the article 150-0 CGI Bter, the holding company must be subject to corporate tax. This requirement forms the basis of the mechanism for deferring taxation of the capital gain recorded during the contribution.

The deferral is allowed because the capital gain is not apprehended by the natural person, but capitalized within a fiscally autonomous entity. As long as the value remains in the holding company, taxation is deferred. A civil society can only fulfill this function if it has opted for SI. As long as it is subject to income tax, its fiscal transparency is incompatible with the logic of deferral.

This condition is independent of the social form chosen.

Parent-daughter regime and equity titles: lack of differentiation

Once the holding company is subject to the IS, civil society at the IS and SAS benefit from the same structuring tax regimes.

The dividends received by the holding company for its participation in the subsidiary fall under the parent-daughter regime, with an almost complete exemption, limited to a share of costs and expenses. Likewise, the subsequent sale of subsidiary shares held for at least two years falls under the equity regime, with residual taxation limited to a share of 12%.

On these points, there is no difference between civil society at IS and SAS. Taxation is therefore not a relevant criterion for choosing. The reasoning must be moved to the legal field.

Civil society at IS: a structuring and protective heritage tool

A legal nature consistent with a passive holding

Civil society is governed by the Civil Code and designed for the management and holding of assets. The option for IS does not change either its legal qualification or the nature of the activity. It remains a civil society, whose object is not primarily the exercise of commercial acts.

This nature is consistent with holding activities. It makes it possible to align the legal form with the real function of the structure, without creating a gap between the tool and its use.

Confidentiality and information control

Civil society is not subject toobligation to file its annual accounts with the registry of the commercial court. The financial information it produces is therefore not made public. This confidentiality is structural and does not depend on the size of the company or on the exercise of a particular option. In asset, family or transfer planning schemes, this total absence of advertising is a decisive advantage.

Conversely, SAS is subject to strengthened accounting obligations. It is required to file its annual accounts at the registry office, in accordance with the provisions of the Commercial Code. There is certainly a mechanism that makes it possible, in some cases, to limit the disclosure of accounts: the option for the confidentiality of annual accounts.

This device is provided for by articles L.123-16-1 and L.123-16 of the Commercial Code.

For the micro businesses within the meaning of article L.123-16-1 of the Commercial Code (headcount, turnover and balance sheet total below thresholds defined by decree), it is possible to request the confidentiality of all annual accounts filed at the registry office. Third parties then have no access to any accounting information.

For the small businesses within the meaning of article L.123-16 of the Commercial Code, confidentiality may be requested in a more limited way: it only relates to Profit and loss statement, the balance sheet and the appendix remaining accessible.

However, these arrangements come with significant exclusions due to the nature of the business of some companies. This is particularly the case with holding companies.

Setting up a holding company: simplicity and cost control

When giving shares to a civil society, the appointment of a contribution auditor is not legally mandatory. This absence of formalism significantly simplifies the establishment of the structure, both in terms of costs and deadlines, without affecting legal security as long as the valuation selected is coherent and properly documented. This flexibility is a real operational advantage in asset restructuring schemes.

Conversely, in SAS, the rules applicable to capital increases through contributions in kind are, in principle, those of public limited companies. No general derogation is provided for on this point. Consequently, when a capital increase is carried out by a contribution in kind, a contribution auditor must be appointed in order to assess, under his responsibility, the value of the assets contributed, in accordance with the provisions of articles L. 225-147 and L. 227-1 of the Commercial Code. The contribution auditor is appointed unanimously by the partners or, failing that, by a court decision.

There is a limited exception when the SAS is incorporated with acontributions in kind not exceeding 30,000 euros and that the total value of these contributions does not exceed half of the share capital. However, this exception remains impractical in most holding schemes, where contributions relate to higher-value company shares. In practice, the intervention of a contribution auditor is therefore the rule in SAS, with the costs, deadlines and formalism that this implies.

Governance: broad statutory freedom, in civil society as well as in SAS

In the vast majority of situations encountered for a holding company, there is no substantial difference between civil society and SAS in terms of the possibilities of organizing governance. In both cases, the statutes make it possible to provide for very fine rules, adapted to the objectives pursued, whether they are voting rights in meetings, of the appointment of mandataries, the appointment of successive or substitutive mandataries in the event of death or incapacity, or even specific rights making it possible to secure certain structuring decisions.

It is thus possible, both in civil society and in SAS, to establish veto rights, reinforced majorities, limitations of powers or specific control rules, without social form constituting, in itself, a barrier. For a holding company, the difference between the two structures is therefore often less marked than one might imagine in terms of internal governance.

However, SAS remains particularly relevant when the holding company is called upon to open up to third parties or to experience frequent movements in its capital. It is then more suitable for organizing the inflows and exits of associates, using preferred shares, structuring fundraising operations or supporting repeated capital developments. In these configurations, SAS offers a framework that is more naturally designed to absorb the complexity and frequency of operations, where civil society is more designed for stability and duration.

Cash flow agreements: possible, but structurally supervised

Civil society at the IS can organize intra-group flows: current account advances, loans, cash centralization. These mechanisms are legally accepted as long as they are authorized by the statutes, economically justified and ancillary to the main object of detention.

Here, civil society imposes useful structural discipline. It limits excesses, while allowing fluid liquidity management when necessary.

SAS: an efficient structure, but intrinsically more exhibiting

A commercial logic by nature

SAS is a commercial company by form, governed by the Commercial Code, regardless of its real activity. Its architecture is designed to allow a great capacity for action and a great fluidity in relationships with third parties. In respect of them, the president has the broadest powers to engage the company, since statutory limitations are, in principle, not enforceable against bona fide third parties. This rule secures external partners and facilitates operations, but it also reduces the internal control of partners.

In practice, SAS is frequently used when the holding company carries out or is called upon to provide services, advice or animation for the benefit of its subsidiaries, because of its commercial nature and its readability for the contracting parties.

However, it should be emphasized That nothing forbids, in legal, accounting or fiscal terms, lthe exercise of such activities within a civil society. The same service provision activity can thus be carried out in one or the other structure, without any difference in treatment in principle. The choice of SAS therefore responds more to a logic of use and perception than to a legal impossibility attached to civil society.

Governance adapted to evolving structures

The SAS is particularly suitable when the holding company is called upon to welcome investors, to set up complex governance bodies, to increase the number of intra-group agreements or to evolve into a leadership role.

In these configurations, the external flexibility of SAS becomes a decisive advantage.

The choice is therefore fundamentally legal and strategic.

La civil society at IS is a tool particularly suited to passive, asset or family holdings, when the objectives are confidentiality, stability, risk management and liability control

La SAS is relevant when the holding company is called upon to act, to evolve, to welcome third parties or to play an active role in a structured group.

Choosing the legal form of your holding company is not choosing a standard. It's choosing a framework of responsibility, power, and protection.

We support you at each stage of the structuring of your holding company in order to secure legal and fiscal choices, to anticipate their consequences over time and to choose the corporate form that best suits your asset objectives.