shareholding must be constituted by individuals who are licensed in France to exercise the relevant regulated profession (e.g., lawyers, pharmacists, biologists, accountants, statutory auditors…). • Furthermore, foreign shareholders must comply with declaratory obligations or must obtain permits or authorizations in some cases which are outlined in section 4 below. Local managing directors: • There is no general requirement for any of the managing directors to reside in France or to be a French citizen. • Foreign managing directors who do not wish to reside in France are exempt from the requirement to hold a temporary residence permit or any other specific authorization. • Foreign managing directors of French companies who wish to reside and exercise commercial activities in France must be in possession of a temporary residence permit (“ carte de séjour temporaire ”) which allows the exercise of such commercial activities. However, EU, EEA or Swiss nationals who wish to reside and exercise commercial activities in France only have to be registered with the municipal authority of their place of residence in France. • All local managing directors, whether resident in France or abroad, must provide affidavits of parentage and non-conviction and file them with the Registry of Commerce and Companies.

Minority shareholders’ rights and protection

Minority shareholders may have specific protection rights negotiated in the articles of association ( statuts ) or via shareholders’ agreements. In addition, French law grants specific rights to shareholders (either to all shareholders or specifically to minority shareholders) such as: • Rights of information (depending on the type of company). • Right to participate and attend all shareholders’ meetings. • In companies having the form of a SA or SAS, shareholders holding one twentieth (5%) of the share capital may (i) ask the commercial court to dismiss the statutory auditor(s), (ii) address written questions to the President, twice a year, on any aspect which may compromise the continuation of the company’s business, (iii) ask the commercial court to appoint an expert in order to produce a report on one or several management activities of the company. • Right to the profits: it is forbidden to allocate the whole profits or losses to one or several shareholders, or to deprive a shareholder of any share in the profits. The exempting of a shareholder from any contribution to losses is also forbidden. • Preferential subscription rights: in certain forms of companies (SA and SAS), each shareholder has a preferential subscription right in the case of a share capital increase.

• Abuse of a majority position:

ILN Corporate Group – Establishing a Business Entity Series

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