Transformation auditor in Paris: Converting to SAS or SA

Transformation auditor in Paris: balance-sheet attestation when converting to SAS or SA#

Is your company changing its legal form: a SARL becoming a SAS, an EURL converting to a SASU, a partnership becoming a joint-stock company? When a company transforms into a joint-stock company and has no statutory auditor, appointing a transformation auditor (commissaire à la transformation) is a legal requirement under article L.224-3 of the French Commercial Code. The mission: appraise the value of the company's assets and any special benefits, and certify that equity supports the share capital of the new form.

Hayot Expertise, a chartered-accountancy and audit firm whose principal is a French statutory auditor registered on the list maintained by the High Authority for Audit (H2A) and a member of the CRCC de Paris, is based at 58 rue de Monceau, 75008 Paris and works throughout France. We carry out the transformation audit engagement together with the tax analysis it calls for. Request a quote within 24 hours or book a meeting.

The appointment is required when three conditions are met:

• your company has no statutory auditor in office;
• it is transforming into a joint-stock company (SAS, SA, SCA, European company);
• the transformation is resolved by the shareholders (extraordinary collective decision).

If your company already has a statutory auditor, that auditor issues the transformation report: no separate appointment is needed.

Decision table: transformation types#

Article L.224-3 covers a company 'of any form whatsoever' that becomes a joint-stock company: an SCI converting into an SAS therefore also falls within scope (with tax and estate-planning issues specific to civil-law companies, to be examined upfront).

Article L.224-3 of the French Commercial Code entrusts the transformation auditor with an assessment, under personal liability, covering:

1. The value of the assets composing the company's property: an inventory and valuation of the assets (fixed assets, inventory, receivables, goodwill, securities, trademarks, software) to verify they support the declared capital.
2. Special benefits: any benefit granted to a shareholder or third party in connection with the transformation (a lease on preferential terms, a guarantee, a transition fee, a debt waiver).
3. The equity attestation: the auditor states whether equity is at least equal to the share capital of the transformed form.

This engagement differs from that of the contribution auditor, which values a specific in-kind contribution at formation or upon a capital increase: here, the transformation auditor appraises the overall value of the company's assets, not a single asset.

Shareholders then rule on the valuation of the assets and the grant of special benefits; they may only reduce these values unanimously. Absent express approval recorded in the minutes, the transformation may be annulled.

Equity below share capital: what it really changes#

A frequent question: "what happens if my equity is lower than the capital I am targeting?"

Contrary to a common belief, this is not an automatic bar to the transformation. The attestation is an information obligation, not a suspensive condition: the auditor notes the shortfall in the report, and the operation may proceed provided business continuity is ensured. This is distinct from the capital-restoration obligation (articles L.223-42 and L.225-248 of the French Commercial Code), which applies, independently of any transformation, when equity falls below half the share capital.

If your equity does not reach the intended capital, several levers let you start on a sound footing, to be chosen based on your balance sheet, timeline and legal strategy:

• Reduce the target capital to align it with the real net position: often the simplest route when losses have absorbed part of the equity.
• Strengthen equity through a cash contribution or a capital increase before the meeting.
• Waive a partner current account (where relevant with a return-to-better-fortune clause), subject to a tax and accounting analysis.
• Prepare an up-to-date interim position: a profitable current year can, on its own, rebuild equity since the last year-end.

If your equity is close to the intended capital, it is best to settle this point before setting the meeting date.

Our view. The auditor does not "save" your transformation: they document the true state of your assets. That is precisely what secures the operation in the eyes of shareholders, banks and future investors.

Only a statutory auditor registered on the list maintained by the High Authority for Audit (H2A) may perform the engagement. The H2A is the independent public authority that succeeded the Haut Conseil du Commissariat aux Comptes (H3C) on 1 January 2024 (Ordinance no. 2023-1142 of 6 December 2023, transposing the EU CSRD directive). The list is set out at I of article L.821-13 of the French Commercial Code. Registration guarantees continuing education, professional liability insurance and compliance with the profession's code of ethics. The auditor is also a member of the relevant Compagnie régionale (CRCC), for Paris the CRCC de Paris. A chartered accountant not registered as a statutory auditor, however well-versed in valuation, cannot sign this report.

• You already have a statutory auditor: they issue the transformation report. Often the smoothest route, as they already know your file.
• You have no statutory auditor: shareholders appoint a transformation auditor unanimously, by private deed. Failing unanimous agreement, the auditor is appointed by court order, on the application of the company's directors or one of them (article L.224-3 of the French Commercial Code). In Paris, the competent court is the Tribunal de commerce de Paris.

Step 1: Scoping#

We review your balance sheet, your assets, the special benefits envisaged and the tax regime of the target form (SAS or SA) together. This initial scoping identifies the watchpoints and prices the engagement.

Step 2: Quote and engagement letter#

We issue a fixed-fee quote within 24 hours and an engagement letter setting the scope, timeline, fees and the list of documents (financial statements, tax return, inventories, key contracts, draft bylaws).

Step 3: Appointment#

Shareholders appoint the transformation auditor unanimously (signed minutes). Failing agreement, the appointment is made by court order of the president of the Commercial Court.

Step 4: Appraisal procedures#

Application of the CNCC information note "The statutory auditor and corporate-form transformations": analysis of the balance sheet and equity, review of inventory, receivables and liabilities, latent liabilities and special benefits, interviews with management.

Step 5: Report#

The written report sets out the methods used, the value of the assets and special benefits, and the equity attestation. It is made available to shareholders before the transformation vote.

Step 6: Formalities#

New bylaws, a notice in a legal gazette, filing via the INPI single window, and the Kbis update. The company keeps its SIREN number.

Our turnaround commitment (up to an express report within 48 to 72 hours for a simple file) starts on receipt of a complete file. To avoid delaying your meeting, here are the documents we request as soon as the engagement letter is signed:

• Current bylaws and the draft new bylaws (target form, intended capital, any special benefits).
• Latest annual accounts: balance sheet, income statement, notes and tax return.
• Recent interim accounts if the last year-end is old.
• Kbis extract less than three months old.
• Minutes appointing the transformation auditor (or the Commercial Court order).
• Breakdown of inventory, receivables and liabilities, and the ledger of partner current accounts.
• Significant contracts: leases, loans, finance leases, guarantees, sureties, major contracts.
• Documents on sensitive assets: goodwill, securities, real estate, trademarks, patents, software, large receivables.
• Letter of representation, drafted by us and signed by the director at the end of the engagement.

Recent bank statements are not systematic: we request them only when cash or certain flows need corroborating in a recent interim position.

Appraising the value of the assets and attesting the equity is more than signing off the balance sheet: it is an item-by-item verification, carried out with the same rigour as an audit (professional standards and the CNCC information note on corporate-form transformations). Here is concretely what we check.

The starting point: book equity. We start from the latest balance sheet (or a recent interim one if the last year-end is old), then apply the restatements needed to move from a book value to a true and fair view of the company's assets. The gap between the two is the heart of the engagement.

Tangible and intangible fixed assets. Existence and ownership of the assets, consistency of depreciation and, above all, real value: goodwill, a trademark or software carried at an old value (sometimes a token euro) may be worth far more, or far less, than its net book value. We document any value-in-use retained.

Inventory. Valuation method (weighted-average or FIFO, LIFO being prohibited in France) and, above all, write-downs of obsolete, damaged or slow-moving items, which are often underestimated.

Trade receivables. Review of the aged balance, identification of doubtful receivables and their impairment, and removal of receivables already collected or without substance.

Shareholder current accounts and liabilities. Justification of the current-account balances (account 455), reality and completeness of trade, tax and social liabilities, and a search for unrecorded liabilities.

Provisions and latent liabilities. Ongoing litigation, pension commitments, guarantees given, likely tax reassessments: risks that weigh on real equity and that must, where relevant, appear in our report.

Special benefits. A census of every benefit granted to a shareholder or third party in connection with the transformation (preferential lease, guarantee, transition fee), because omitting them exposes the operation to annulment.

At the end of this work, we reconcile real equity with the capital targeted by the new form, then conclude, in a written and reasoned report, on the value of the assets, the special benefits and the coverage of the share capital. This approach extends that of the statutory audit: same method, same independence, in the service of a secure transformation.

To make these procedures concrete, here is a representative case, built from comparable engagements and using no real client data.

A Paris-based services SARL, with no statutory auditor, decides to convert to a SAS to bring in an investor, with a target share capital of €100,000. Its book equity stands at €112,000: at first sight, capital coverage looks secured.

Our procedures lead to three downward restatements:

After restatements, real equity comes to €77,000, below the €100,000 target.

What this changes in practice. The transformation is not blocked: the attestation is an information duty, not a suspensive condition. Our report documents the shortfall and is given to the shareholders before the meeting. Here, they decide to set the SAS capital at €75,000 rather than €100,000, to start on a truthful basis with the investor and avoid a later capital reduction. The operation is secured, the negotiation rests on reliable accounts, and the report serves as a shared reference between the shareholders and the new entrant.

A transformation is, in principle, tax-neutral: the legal entity continues (same SIREN, same contracts, same employees) and taxation carries on without an immediate charge.

The pitfall is a change in tax regime. If the transformation involves a shift from individual taxation to corporate tax (or vice versa), the operation in principle triggers the tax consequences of a cessation of business (article 202 ter of the French Tax Code): taxation of deferred profits and latent gains. A relief regime exists under conditions (article 221 bis). A prior tax analysis, built into our engagement, is essential.

Fees depend on the size and complexity of the balance sheet, the presence of intangible assets and the number of special benefits to assess.

Fees are fixed, confirmed in writing within 24 hours of reviewing the file. The initial scoping is free. Request a quote.

The clock starts only on receipt of a complete, usable file. The upstream phase (scoping, document collection, any interim accounts prepared by your accountant) usually takes a few days; the analysis runs in parallel with collection, not after.

For a simple, complete file (EURL to SASU, a balance sheet with no risk area), the report is delivered on an express basis, within 48 to 72 hours. For a mid-sized company or a balance sheet with liabilities and special benefits, allow 5 to 20 business days. In every case, the report must be kept at the registered office, available to shareholders, at least eight days before the meeting called to vote on the transformation (article R.224-3 of the French Commercial Code).

1. The gap between actual equity and intended capital. Depreciated inventory, doubtful receivables, poorly documented partner current accounts: the auditor's adjustments may reduce the capital you can declare. Better anticipated than discovered at the meeting.
2. Overlooked special benefits. A lease granted to the director at preferential rates, a guarantee, an exclusivity clause: these benefits must be made explicit. Omitting them exposes the transformation to annulment for lack of express approval.
3. The change in tax regime. Switching from individual to corporate taxation during the transformation can trigger a substantial immediate tax charge. Planning ahead avoids unpleasant surprises.

• Statutory auditor registered with the H2A, authorised to sign the transformation report, member of the CRCC de Paris, covered by professional liability insurance.
• Combined chartered-accountancy and audit firm: a coherent accounting, legal and tax reading without multiplying advisers.
• Integrated tax analysis: each engagement comes with an income/corporate-tax review and anticipation of the tax consequences.
• Paris 8 base, nationwide engagements: files handled remotely throughout France using paperless tools.
• Transparency: fixed-fee quote within 24 hours, clear engagement letter, free initial scoping.