Corporate purpose: drafting it well in the articles
The corporate purpose is a mandatory clause in the articles of association. Drafted too narrowly, it forces a statutory amendment for every new activity. Too broad, it worries banks and partners. Here is how to strike the right balance, with drafting examples.
Expert note: This article was written by our chartered accountancy firm. Information is current as of 2026. For a personalised review of your situation, contact us.
Quick answer. The corporate purpose describes the activities your company is allowed to carry out. It is mandatory in the articles of association (article L210-2 of the French Commercial Code). Drafted too narrowly, it forces a costly statutory amendment as soon as a new activity appears. Too broad, it blurs your image and worries your partners. The challenge is to aim accurately.
When you set up a SASU, a SARL or an SCI, the corporate purpose is one of the first clauses you are asked to complete. It is also one of the most rushed, for lack of time or because the template found online seems good enough. Yet these few lines drive very concrete consequences: your APE code, the scope of what your director can commit the company to, and the future cost of every new activity. A poorly calibrated clause does not show on incorporation day. It comes back to you two or three years later, when you want to open a new line of business and the bank or a client points you back to your articles.
In this article, we explain what the corporate purpose really is, what happens when a director acts beyond it, and how to draft a clause that is neither too narrow nor too broad. With, in the end, a method and concrete wording used in our incorporation files.
What the corporate purpose is, and why it is mandatory#
The corporate purpose designates all the activities the company is authorised to carry out. It does not describe what you do day to day, but what the company may do within its articles. It is a mandatory mention: article L210-2 of the Commercial Code ranks the corporate purpose alongside the company form, its duration (which may not exceed 99 years), its name, its registered office and its share capital. No corporate purpose, no valid articles, and therefore no registration.
This declared purpose is more than a formality. It produces three practical effects to keep in mind before drafting.
| Effect of the corporate purpose | Concrete consequence |
|---|---|
| Basis for the APE/NAF code | INSEE assigns your APE code from the main activity described. This code follows your company everywhere (bank, insurance, agreements) |
| Enforceable scope of activity | It delimits what the company can commit to towards third parties and its partners |
| Regulated activities | For certain activities, it conditions the requirement of a qualification or an authorisation |
A point often misunderstood: the APE code is assigned by INSEE on the main activity, not on the whole purpose. If your clause lists five trades, the administration retains the dominant one. Hence the importance of placing the activity that is truly your core business at the head of the clause.
What happens when an act exceeds the corporate purpose#
This is where drafting takes on its full importance, and it is also the least intuitive point. What happens if the director signs a contract that does not fall within the declared purpose? The answer depends on the company form.
In limited liability companies and joint-stock companies, the rule protects third parties. The company is bound even by acts of the director that do not fall within the corporate purpose. It can only escape by proving that the third party knew the act exceeded the purpose, or could not have been unaware of it given the circumstances. This rule applies in the SARL (article L223-18 of the Commercial Code) as in the SAS (article L227-6). In other words, towards a supplier or a bank, the corporate purpose almost never acts as a shield.
On the other hand, a director who acts beyond the purpose engages their liability internally, towards the partners. The corporate purpose then becomes an internal limit: it sets what the director is entitled to commit without exceeding their mandate.
| Company type | Director's act beyond purpose | Is the company bound towards third parties? |
|---|---|---|
| SARL (L223-18) | Contract outside the purpose | Yes, unless proof the third party knew or could not be unaware |
| SAS (L227-6) | Contract outside the purpose | Yes, unless proof the third party knew or could not be unaware |
| SNC and partnerships | Act outside the purpose | No, the company is not bound |
Our reading. Many founders think the corporate purpose protects them from the director's risky commitments. That is false in the SARL and the SAS: the company pays first and settles its accounts internally afterwards. The real difference plays out in partnerships, where an act outside the purpose does not bind the company. Do not base your drafting on a protection that does not exist in your form.
The double trap: too narrow, too broad#
Drafting the purpose swings between two symmetrical pitfalls. Neither is neutral.
A purpose that is too narrow#
A purpose drafted around a single activity, worded down to the letter, locks you in. As soon as you want to add an uncovered activity, you must amend the corporate purpose. That means a decision in a general meeting (statutory amendment), the publication of a legal notice and a formality at the one-stop shop. That is a cost and a delay, to repeat at every change.
A purpose that is too broad#
Conversely, a catch-all clause listing dozens of unrelated activities has its own flaws. It can arouse the distrust of banks and partners, who struggle to identify your real activity. It blurs your positioning. And above all, it never exempts you from obtaining the authorisations specific to regulated activities you might claim to carry out: declaring that you do brokerage or transport gives you no right if the authorisation is missing.
| Criterion | Purpose too narrow | Purpose too broad |
|---|---|---|
| Flexibility for growth | Low: amendment for each new activity | High on paper |
| Recurring cost | Legal notice + formality at each extension | No direct cost |
| Image with banks | Clear but rigid | Vague, may worry |
| Reading of the APE code | Precise | Risk of an unrepresentative code |
| Regulated activities | No exemption from authorisation | No exemption from authorisation |
The underestimated risk. The most frequent trap is not the too broad, it is the too narrow copied from a template. A founder starting a consulting activity drafts "strategic marketing consulting". Eighteen months later, they want to sell training and a software product. Neither activity falls within the purpose. Result: two statutory amendments, two legal notices, two filings at the one-stop shop. All of this could have been anticipated upstream.
In practice: the drafting method#
Good practice, the one we apply in our files, combines precision and flexibility. Concretely, in three steps.
- Describe the main activity precisely. It determines your APE code and gives the clause its readability. Put it at the head.
- Add the connected activities you genuinely envisage within two or three years, if they are identifiable. Not a catalogue, only what is credible.
- End with an extension clause that covers related operations without listing everything. A common wording is: "and more generally all operations relating directly or indirectly to this purpose and likely to facilitate its development".
This extension clause is the central lever. It absorbs ancillary activities, related services and financial or property operations serving the core business, without turning your purpose into an inventory. It creates no right over a regulated activity: it widens the scope of natural operations, not that of new and distinct trades.
| Envisaged activity | Covered by the purpose? |
|---|---|
| Main activity described at the head | Yes, directly |
| Related ancillary service (e.g. maintenance linked to the product sold) | Yes, through the extension clause |
| New and distinct activity (e.g. moving from consulting to declared training) | No, amendment of the purpose required |
| Regulated activity without authorisation | No, the purpose does not replace the authorisation |
Hayot Expertise tip. Before fixing the purpose, take thirty minutes to list everything you think you might do within three years, even uncertain leads. It is the most profitable exercise of incorporation: it costs one meeting and avoids a string of statutory amendments. We do it systematically in our incorporation engagements.
Special cases#
A few situations deserve specific attention, because the general rule applies there with nuances.
Regulated activities. For professions and activities subject to a qualification, authorisation or registration (health, brokerage, transport, certain regulated professions), the corporate purpose is never enough. You must hold the authorisation upstream. Mentioning the activity in the purpose without the authorisation exposes you to refusal of registration or to later sanctions.
General partnerships and partnerships. As seen above, an act outside the purpose does not bind the company. Drafting the purpose therefore carries greater legal weight than in the SARL or the SAS: it genuinely bounds the commitments enforceable against third parties. A too narrow purpose is more penalising there.
Mission-led company. If you want the mission-led company status, your raison d'être and your social and environmental objectives must appear in the articles, distinctly from the commercial corporate purpose. These are two different clauses that must not be merged.
Holding company. For a holding, the purpose generally describes the acquisition of shareholdings, the management of a securities portfolio and, often, services to subsidiaries (active management). The drafting must be consistent with the active or passive nature of the holding, which carries tax and wealth consequences. This is a case where the clause is drafted in line with the overall strategy, not in isolation.
2026 points to watch#
A few operational reminders to avoid mistakes at incorporation or when extending an activity.
- The corporate purpose appears in the articles and must be consistent with the activity declared at the one-stop shop. An inconsistency between the two slows the processing of the file.
- Amending the purpose involves a meeting, a legal notice and a formality: anticipate this cost rather than face it under pressure.
- The APE code assigned by INSEE derives from the main activity. If it does not match your reality, it often means the main activity was poorly ranked in the clause.
- The extension clause widens related operations, never regulated trades without authorisation.
Frequently asked questions
Is the corporate purpose really mandatory in the articles?+
Yes. Article L210-2 of the Commercial Code lists the corporate purpose among the mandatory mentions of the articles, with the form, duration, name, registered office and capital. Without a drafted corporate purpose, the articles are incomplete and registration cannot proceed.
What does the company risk if the director signs an act outside the corporate purpose?+
In the SARL and the SAS, the company remains bound towards the third party, unless it proves the third party knew the act exceeded the purpose. The director engages their liability towards the partners. The purpose therefore offers little protection against third parties in these forms.
Is a broad or a narrow corporate purpose better?+
Neither to excess. A too narrow purpose forces an amendment for every new activity, with cost and delay. A too broad purpose worries partners and blurs your image. The right approach is to describe the main activity precisely, then add an extension clause.
Does the extension clause allow any activity?+
No. The wording "all operations relating directly or indirectly to this purpose" covers connected and ancillary activities, not new and distinct trades. It never exempts you from an authorisation for a regulated activity.
How do I add an activity not provided for in the corporate purpose?+
You must amend the corporate purpose: a decision in a general meeting (statutory amendment), publication of a legal notice, then a formality at the one-stop shop. It is a regulated procedure that takes time and has a cost, to anticipate from incorporation.
Does the corporate purpose determine my APE code?+
Indirectly. INSEE assigns the APE code from the main activity described in the purpose and declared at the one-stop shop. If several activities appear, the main one is retained, which is why it should be placed at the head of the clause.
Can a poorly drafted corporate purpose block financing?+
A vague or too broad purpose can arouse the distrust of a bank that struggles to grasp your real activity. A too narrow purpose may not cover the activity you are financing. In both cases, a clear clause consistent with your project is preferable.
Key takeaways#
- The corporate purpose is a mandatory mention of the articles (article L210-2 of the Commercial Code) and serves as the basis for the APE code assigned by INSEE.
- In the SARL (L223-18) and the SAS (L227-6), the company remains bound towards third parties even for an act outside the purpose; the protection mainly applies in partnerships.
- A too narrow purpose forces a costly statutory amendment for every new activity; a too broad purpose worries banks and partners.
- Good practice: describe the main activity precisely, then add an extension clause for connected operations.
- The extension clause never authorises a regulated activity without the corresponding authorisation.
- Anticipate your activities over three years before fixing the purpose: it is the most profitable exercise of incorporation.
Drafting the corporate purpose is an integral part of our business creation support, where we calibrate each clause against your real project. For questions of structuring and statutory clauses, our legal advisory team works alongside the accounting engagement. To go further, see our guides on drafting SAS articles, the procedure for amending the corporate purpose, the INPI one-stop shop and the incorporation legal notice. If you are still hesitating on the form, our SARL or SAS comparison clarifies the choice.
This article informs on a general principle. Drafting a corporate purpose suited to your situation requires a review of your project, your activities and the chosen form. Article written by Samuel Hayot, chartered accountant registered with the Ordre des experts-comptables d'Île-de-France. Up to date as of 17 June 2026.
Article written by Samuel HAYOT
Chartered Accountant, registered with the Institute of Chartered Accountants.
Regulated French accounting and audit firm based in Paris 8, built to support companies across France with a digital and decision-oriented approach.
Sources
Official and operational sources cited for this page.
This topic is part of our service Company formation in France | SASU, SAS, SARL
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