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Société Civile Immobilière (SCI)

8. Running an SCI

Once you have set up the company, there are a number of accounting, taxation and legal formalities to regularly undertake, as the company is a separate legal entity and must be treated as such.

There is also a cost to these administrative formalities.

Thus, there is the need to hold an annual general meeting, prepare a set of annual accounts, maintain a company bank account, and submit an annual tax return.

Repairs and improvement works, as well as the running costs of the property, must be processed through the company, with funds deposited in the company bank account by the owners.

If this is not done properly there is the risk that the French tax authorities will not accept the company as a proper legal entity.

Of equal importance will be the need to ensure that lenders (both current and potential) are happy with the way the company is being managed.

The company will need to appoint a director (gérant) who will have responsibility, and the authority that goes with it, to deal with many of the day to day decisions of the company.

The gérant need not necessarily be one of the shareholders, although it is normally the senior family member who would take this role.

The powers of the gérant will need careful drafting, as they will be able to take important decisions on behalf of the company without necessarily consulting with the other shareholders.

A gérant who is also a majority shareholder would not be able to be removed from this role by the other shareholders.

However, having only one gérant can led to potential difficulites in the event that they are not available due to ill-health. In the event of death, the problem is even more complicated, as to change them requires a general meeting which normally only the gérant can call. That means it might be necessary to go to court to appoint a new gérant. Accordingly, it would generally be best to appoint co gérants.

A simple and fairly inexpensive way of delegating management of the formalities would be to hand them over to a French accountant. A simply family SCI would not be expensive.