UK and France: A Company Formation Comparison

The UK and France are both strong jurisdictions within Europe, boasting huge markets, stable economies, and a substantial political presence.

They also play a major part in the European Union.

The UK has one of the most successful economies in the EU and attracts an incredible amount of inward investment from Asia and the US. France has also been successful in attracting foreign investment and now offers a liberal business environment with streamlined procedures. There are various benefits for setting up a company in the UK and France. Location, language and legislation are just a few of the reasons why investors choose to base their companies there. This article will compare the two locations to assist in choosing the best location for your business. 

Procedures involved in company formation in both countries do differ, despite both countries complying with EU directives. This article looks to demonstrate these differences and similarities, in conjunction with the strengths and weaknesses of each.

Types of Company Formation

Both countries provide a range of company forms to suit various types of businesses:

The four main company types in the UK include:

  • Private Limited Company (Ltd)
  • Public Limited Company (PLC)
  • Branch of a foreign company
  • Limited Liability Partnership

The three main company types in Frace include:

  • Business Corporation – Societé Anonyme (SA)
  • Specialists Limited Company – SARL
  • Simplified Stock Corporation – SAS

How complicated is the formation process?

As French procedures for company formation have been liberalised significantly in recent years, the process is much more streamlined. Stringent French bureaucracy, however, still exists and this can be difficult to navigate if you are non-domicile or unfamiliar with the regulations. General formalities of company formation include share capital (amounts vary), shareholders, bank account, local office, statutory required audited accounts and tax registration.

UK company formation formalities also include director/shareholder, share capital, bank account, local office, tax registration and statutory required audited accounts. There is much less legislation involved than in France and as such the timescale is much shorter. Setting up a UK company can be done within a week. Regulations still apply though, and although welcoming to foreign investment, the process can pose difficulties for non-domiciles.

Availability of staff

While recruiting staff in France is relatively easy, with a number of educated and skilled workers available, French labour laws are incredibly complex and warrant expert legal advice and support. It is important to take particular care with employment contracts and the regulations surrounding them, and collective agreements with regard to commercial and industrial sectors, and the employees within these sectors.

Labour laws are much less stringent in the UK. There is a thriving recruitment sector of well-educated and motivated British workers, despite the unemployment rate consistently falling over the past decade. The workers are perfectly well trained to cope with different management styles and certain areas of the UK away from the capital have an abundance of ready workers.

Regulatory Climate

In order to facilitate foreign investment into the country, the UK has ensured that the regulatory environment is as liberal as possible. There are few restrictions on aspects of business such as foreign ownership or investment. However, regulations in certain sectors, such as financial services, remain strictly enforced for the protection of the consumer and against monopoly powers

The French legal system is both slow and expensive, with a myriad of complicated regulations making French legislation difficult to understand. There are strict regulations on state ownership which plays a significant part in the economy, particularly in industries such as infrastructure. However, in broad terms the legal and regulatory system can be described as well-developed, following the EU lead in many areas. Banking, insurance, imports and foreign capital are loosely regulated, making business in these areas facilitated by the French government and authorities.

Financial Incentives

New businesses setting up in France can benefit from various types of assistance including grants, incentives and commercial bank loans. These may be provided by the national or local authorities and be helpful with regard to access to support services or finding a site. There may also be tax incentives and grants for innovative new companies.

The UK also offers a range of financial incentives for foreign investment in certain areas and sectors of the UK business industry and economy. Research and development grants, technical assistance for exports, and export credit guarantees are widely available. There are also grants for job-creating investment in areas of the country away from the South East.