Converting a SASU into an EURL

Many managers of a SASU (single-shareholder simplified joint-stock company) ask whether they should convert their company into an EURL (single-member limited liability company). This step, technically known as a conversion of the company (transformation), is often driven by tax, estate planning or governance considerations. Unlike a dissolution followed by the creation of a new company, which would mean the legal disappearance of the entity, a conversion preserves the legal personality and the history of the business while changing its legal form. This practical guide sets out the terms, conditions and consequences of an operation that is complex but fully regulated by company law.

Legal framework for the conversion of a SASU into an EURL

Distinction between conversion and other operations

The conversion of a SASU into an EURL is a major amendment of the articles of association. It falls to the sole shareholder, who exercises the powers vested in shareholders for a conversion (Articles L. 227-1, paragraph 2, and L. 227-9 of the French Commercial Code). This operation is fundamentally different from a dissolution followed by the creation of a new company. The conversion preserves the legal personality, the SIREN number, existing contracts and corporate seniority.

The French Commercial Code lays down the principle of continuity of the legal person. Article L. 210-6 provides that the regular conversion of a company does not result in the creation of a new legal person. This legal continuity is the main advantage of the operation over a dissolution and reconstitution.

Substantive conditions for the conversion

The conversion of a SASU into an EURL is subject to several conditions. No minimum period of existence is required: Article L. 225-243 of the French Commercial Code, which makes the conversion of a public limited company (société anonyme) conditional on two years of existence and the approval of the accounts for its first two financial years, is among the provisions that Article L. 227-1, paragraph 3, declares inapplicable to the simplified joint-stock company (SAS).

Next, the articles of association of the EURL must comply with the mandatory rules applicable to the SARL (private limited company) (Articles L. 223-1 et seq. of the French Commercial Code), in particular those relating to management and to decisions of the sole member.

Finally, the sole shareholder, whether an individual or a legal entity, must expressly accept the conversion and the new governance rules specific to the EURL, in particular as regards management and control.

Conversion procedure: detailed steps

Conversion decision by the sole shareholder

The conversion decision lies exclusively with the sole shareholder of the SASU, who cannot delegate his or her powers; it is recorded in the register of decisions (Article L. 227-9 of the French Commercial Code). The decision must be set out in detailed minutes stating the reasons for the conversion, the amendments to the articles of association adopted and the appointment of the new manager. The operation of the SASU and the prerogatives of its sole shareholder are presented in our guide on the SASU and the sole shareholder.

The manager of the SASU first prepares a detailed report on the reasons for and terms of the conversion. Although this report is not legally mandatory where there is a sole shareholder, it is recommended practice for documenting the regularity of the operation.

The decision of the sole shareholder simultaneously adopts the new articles of association of the EURL, which must comply with the provisions of the French Commercial Code governing this corporate form. The articles specify in particular the extent of the manager's powers and the decision-making arrangements.

Administrative formalities and legal publicity

The conversion requires specific formalities to be completed in a set order. A legal notice must be published in a newspaper authorised to carry legal notices in the département of the registered office, stating the conversion, the characteristics of the new corporate form and the implementing arrangements.

The amendment file is then filed electronically with the single body in charge of business formalities (Article L. 123-33 of the French Commercial Code). It includes the updated articles of association, the decision of the sole shareholder and the certificate of publication of the legal notice.

The authorities then update the Trade and Companies Register (registre du commerce et des sociétés). The amended Kbis extract shows the new legal form while retaining the same SIREN number, which reflects the continuity of the legal personality.

Timing and costs of the procedure

The conversion generally takes four to six weeks. The costs comprise the legal notice, the registry fees for the amending entry in the Trade and Companies Register and any fees for legal assistance.

These periods may be extended if the authorities make observations on the file or if additional documents are required. A sufficient time margin should therefore be allowed, in particular where the conversion forms part of a tight tax timetable.

Tax implications of the conversion

Tax regime applicable to the operation

Where the company remains subject to corporate income tax after its conversion, the operation, which does not result in the creation of a new legal person, does not give rise to the immediate taxation provided for on the cessation of a business (Article 221, 2 of the French General Tax Code).

Conversely, if the EURL is subject to income tax, the company ceases to be subject to corporate income tax, which in principle has the consequences of a cessation of business: immediate taxation of profits not yet taxed and of unrealised capital gains (Article 221, 2, second paragraph, of the French General Tax Code), subject to the relief provided for in Article 221 bis. A dissolution followed by a new creation has the same consequences.

Where the sole shareholder is an individual, the EURL is subject by operation of law to the tax regime for partnerships. To retain corporate income tax, the election must be notified before the end of the third month following the conversion; it takes effect on the same date as the conversion (Article 239, 1 of the French General Tax Code). Where no election is made at the time of the conversion, a company resulting from the conversion of a company limited by shares less than fifteen years earlier can no longer subsequently elect for corporate income tax (same article).

Choice of tax regime for the converted EURL

The conversion leads to a reconsideration of the company's tax regime. Where the sole shareholder is an individual, the EURL is subject by operation of law to the tax regime for partnerships, unless it elects for corporate income tax.

This regime allows profits to be taxed directly in the name of the sole shareholder and losses to be set against his or her overall income under the conditions of Article 156 of the French General Tax Code. It may be attractive during a development phase or where there are losses.

The decision must be carefully considered. The election for corporate income tax may be revoked up to the fifth financial year following the one for which it was made, and then becomes irrevocable; a company that has given it up can no longer elect again (Article 239, 1 of the French General Tax Code).

Consequences for VAT

The conversion generally does not affect the business's VAT regime, which keeps its intra-Community VAT number and its filing obligations. Certain specific points nonetheless deserve attention.

If the SASU benefited from the simplified taxation regime because of its turnover, that situation continues after the conversion. Likewise, partially taxable persons keep their deduction regime.

Businesses subject to specific sector regimes (margin scheme for second-hand goods, travel agencies, etc.) also maintain their previous situation, provided that the activity remains the same.

Estate-related and social aspects of the conversion

Impact on existing contracts

The continuity of the legal personality ensures that all contracts entered into by the SASU are automatically maintained. Commercial contracts, leases, loans and insurance policies remain fully enforceable without the need for an amendment or a novation.

This rule is, however, subject to contractual exceptions. Some contracts contain change-of-control or change-of-legal-form clauses allowing early termination. The main agreements should therefore be reviewed to identify such clauses and, where appropriate, to negotiate their neutralisation.

Employment contracts continue with the company, whose legal personality is unchanged. Employees keep their seniority, their benefits under collective agreements and their paid leave entitlements.

Consequences for guarantees and security

Personal guarantees granted by the SASU remain fully enforceable after the conversion. Sureties, avals and first-demand guarantees pass automatically to the EURL without release of the principal debtor.

Guarantees granted by third parties in favour of the creditors of the SASU, in particular sureties given by the former president, continue, as the conversion does not create a new legal person (Article L. 210-6 of the French Commercial Code). Their scope depends on the terms of each instrument, which should be checked.

Security interests over assets (mortgages, pledges over business assets or securities, and pledges of movable property) are maintained automatically thanks to the continuity of the legal personality. No renewal or transfer formality is required, which is a significant advantage of the conversion.

Social protection of the manager

The conversion substantially changes the manager's social security regime. The president of a SASU falls under the general scheme as an employee-equivalent (Article L. 311-3, 23° of the French Social Security Code). The manager of an EURL who is also its sole member falls under the scheme for self-employed workers; only a manager who is not a member falls under the general scheme (Article L. 311-3, 11°). The differences between these two forms, in particular as regards social security and tax, are compared in our guide on choosing between a SASU and an EURL.

This change entails a change of affiliated body (social security for the self-employed instead of the general scheme) and a change in the rates and the basis of contributions. It has no effect on unemployment insurance, to which the president of a SASU does not contribute in respect of that office.

The manager must plan for this transition by regularising his or her situation with the social security bodies concerned. A period of temporary dual registration may be necessary while the administrations update their records.

Legal risks and precautions to take

Protection of creditors and opposition

Although the law does not provide for a specific procedure for creditors to oppose a SASU-EURL conversion, case law accepts that they may challenge the operation if it prejudices their rights.

Creditors may in particular allege fraud if the conversion is intended to escape their claims or to reduce their security. They may, where appropriate, bring the action paulienne (action to set aside acts made in fraud of creditors), which allows acts made by the debtor in fraud of their rights to be declared unenforceable against them (Article 1341-2 of the French Civil Code). This action is subject to a five-year limitation period running from the day the creditor knew or should have known the facts enabling it to bring the action (Article 2224 of the French Civil Code).

To prevent these risks, the main creditors should be informed of the planned conversion and it should be ensured that it does not jeopardise performance of the commitments entered into. A sound financial position at the time of the operation is the best protection.

Liability of the manager

The conversion engages the manager's civil and criminal liability in the event of irregularity. Failure to comply with the legal formalities may lead to the operation being annulled, with all the resulting consequences for third parties acting in good faith.

More seriously, a fraudulent conversion may constitute the offence of presenting inaccurate accounts or distributing fictitious dividends if it conceals a deteriorated financial situation. Criminal penalties may reach five years' imprisonment and a fine of 375,000 euros.

The manager should therefore seek competent advice and carefully document the economic and legal reasons justifying the conversion. Preparing a complete file is the best protection in the event of a later challenge.

Nullity of the conversion

The nullity of the conversion can only be ordered on the grounds provided for by company law, the regime of which was reformed by Ordinance No. 2025-229 of 12 March 2025, applicable since 1 October 2025. The absence of legal publicity is a matter of regularisation of formalities. As no minimum period of existence is required for the conversion of a SAS, failure to observe one cannot constitute a ground of nullity.

An action for nullity is subject to a two-year limitation period running from the day the nullity is incurred (Article 1844-14 of the French Civil Code, as amended by Ordinance No. 2025-229 of 12 March 2025, applicable since 1 October 2025; the period was previously three years under Article L. 235-9 of the French Commercial Code, now repealed). After that period, the operation can no longer be called into question by way of nullity.

Nullity results in restoration of the prior position, with all the practical difficulties that entails. Hence the vital importance of scrupulously following the legal procedure when carrying out the operation.

Alternatives to conversion

Comparison with dissolution and re-creation

The dissolution of the SASU followed by the creation of an EURL is the main alternative to conversion. This solution has the advantage of procedural simplicity but gives rise to major drawbacks. The legal steps and formalities for closing down a business are described in our article on the cessation and dissolution of the company.

For tax purposes, dissolution triggers the immediate taxation of reserves and unrealised capital gains, which can represent a considerable burden. In terms of employment, it requires the transfer of employment contracts to the new company to be organised and results in the automatic termination of certain agreements.

Legally, the creation of a new legal person requires all contracts and administrative authorisations to be renegotiated. These constraints generally make conversion more attractive despite its relative complexity.

Other possible amendments to the articles of association

Some of the objectives pursued through conversion can be achieved by simple amendments to the articles of association. Adjusting the powers of the president, changing the corporate purpose or changing the share capital are lighter alternatives.

Likewise, a change of tax regime can sometimes be obtained without changing the legal form. The SASU, which is subject by operation of law to corporate income tax, may, under the strict conditions of Article 239 bis AB of the French General Tax Code, temporarily elect for the tax regime for partnerships.

These alternative solutions deserve to be examined before starting a conversion procedure, in particular where the estate-related and tax stakes remain limited.

Optimising the conversion

Optimal timing of the operation

The choice of the timing of the conversion is of crucial importance. As no minimum period of existence is required, the timetable is determined by accounting and tax considerations: the effective date of the conversion and, where applicable, the election for corporate income tax, to be notified within three months of the conversion, must be coordinated with the current financial year.

The personal tax considerations of the sole shareholder must also be taken into account. If the EURL opts for tax transparency, the results will be taxed directly on his or her personal tax return, which may justify a change in timing.

Finally, the contractual environment may dictate the timetable. Certain important deadlines (lease renewals, financing negotiations, etc.) sometimes justify waiting for them to be resolved before starting the conversion.

Advice on estate optimisation

The SASU-EURL conversion often forms part of the manager's overall estate planning strategy. The operation may precede a business transfer, a change of matrimonial property regime or a family restructuring.

Anticipating these developments makes it possible to optimise the legal and tax structure chosen. The entry of new members does not, moreover, require any conversion: the EURL becomes a multi-member SARL by transfer or issue of shares (parts sociales), just as the SASU becomes a multi-shareholder SAS by transfer or issue of shares (actions).

Likewise, the tax regime of the EURL can be chosen according to development prospects. Tax transparency suits growing businesses, whereas corporate income tax favours the building up of reserves.

The conversion of a SASU into an EURL is a complex legal operation, but one that is fully manageable with appropriate assistance. It offers significant tax and estate advantages while preserving the continuity of the business. The success of the operation depends on scrupulous compliance with the legal procedure and on anticipating the consequences for every aspect of the company's life. Before starting this conversion, its stakes should be precisely assessed and it should be ensured that the objectives pursued cannot be achieved by lighter amendments to the articles of association. Advice from counsel remains essential to secure the operation legally and to optimise its tax and estate effects.

Frequently asked questions

How long does it take to convert a SASU into an EURL?

The procedure generally takes 4 to 6 weeks between the conversion decision and the update of the Kbis extract. This period includes publication of the legal notice (8 days for publication), filing of the file with the business formalities centre and administrative processing by the registry. Complications may extend these periods if the authorities make observations.

Is the SASU-EURL conversion tax neutral?

It is where the company remains subject to corporate income tax, which means, if the sole shareholder is an individual, that the election for corporate income tax must be notified within three months of the conversion (Article 239, 1 of the French General Tax Code). Failing that, leaving the corporate income tax regime has the consequences of a cessation of business (Article 221, 2 of the same code), subject to the relief in Article 221 bis.

Must one wait two years after the creation of the SASU before converting it?

No. Article L. 225-243 of the French Commercial Code, which requires public limited companies to have existed for two years and to have had the accounts for their first two financial years approved before any conversion, does not apply to the simplified joint-stock company, Article L. 227-1, paragraph 3, expressly excluding it. A SASU can therefore be converted into an EURL without any minimum period.

Are the SASU's contracts maintained after conversion into an EURL?

All contracts entered into by the SASU are automatically maintained thanks to the continuity of the legal personality provided for by Article L. 210-6 of the French Commercial Code. This rule applies to commercial contracts, leases, loans and insurance policies. Only certain specific contractual clauses may provide for termination on a change of legal form.

Does the manager change social security regime after the conversion?

Yes, the conversion changes the manager's social security regime. The president of a SASU, an employee-equivalent under the general scheme, becomes the manager and sole member of an EURL, a self-employed worker. This change alters the rates and the basis of social security contributions; it has no effect on unemployment insurance, to which the president of a SASU did not contribute. Regularisation with the bodies concerned is necessary.

Can a SASU-EURL conversion be annulled?

An action for nullity of the conversion is subject to a two-year limitation period running from the day the nullity is incurred (Article 1844-14 of the French Civil Code, applicable since 1 October 2025). It requires a ground of nullity provided for by law; the absence of a minimum period of existence cannot constitute one for a SAS. After that period, the conversion can no longer be called into question by way of nullity.

What is the total cost of a SASU-EURL conversion?

The compulsory costs comprise the cost of the legal notice and the registry fees for the amending entry, to which are added, where applicable, fees for legal assistance and the tax consequences of the operation where the company leaves the corporate income tax regime.