Owning property in France through an SCI brings real advantages, but it also creates annual legal duties that many shareholders are not aware of. These obligations apply even though SCIs are not commercial companies. They ensure that the company remains valid, that decisions can be implemented, and that tax and administrative risks are avoided.
Annual accounts and management reporting
An SCI must maintain accounts and present them to the shareholders each year. This includes a balance sheet, profit and loss account and a management report. The manager (“gérant”) is responsible for preparing these documents and presenting them to the partners during an annual general meeting.
Annual general meeting (AGM)
Holding an AGM is a legal requirement. Article 1856 of the French Civil Code states that SCI managers must report on their management of the company each year, which makes a yearly meeting mandatory.
Convening the meeting
The manager usually calls the meeting, unless the statutes state otherwise. If the SCI has several managers, the statutes must set out who has authority to convene the AGM. Shareholders also have the right to request a meeting. If a manager ignores such a request, the shareholder can apply to the regional court to appoint someone to convene it.
Formal requirements
Notices must be sent by registered post with acknowledgement of receipt at least 15 days before the meeting, unless all partners are present or represented, in which case verbal notice is accepted. Every partner must be invited. If even one partner is omitted, the decisions taken may be cancelled.
The notice must include the agenda, and each item should be described clearly so that shareholders know what will be discussed.
Holding the meeting
The meeting usually takes place at the SCI’s registered office, or wherever the notice specifies. An attendance sheet must be signed. Shareholders unable to attend may appoint a proxy if the statutes allow it. The quorum and voting rules depend on what is set out in the statutes.
Minutes and record-keeping
Like any company, an SCI must produce minutes of the meeting. These must record:
- the company name, share capital and registered office
- the RCS registration location
- the names of all partners (present or represented) and their shareholdings
- the agenda
- documents presented
- a summary of discussions
- each resolution and the voting results
- the closing of the meeting and signatures
The minutes must be kept at the SCI’s registered office and made available to shareholders.
Accounting obligations
Although SCIs do not follow the full commercial accounting regime, they must keep adequate records. Proper accounting is compulsory if:
- the SCI is taxed under corporation tax, and/or
- it carries out commercial activities, such as furnished lettings, and/or
- its turnover exceeds certain thresholds.
Even where not strictly required, maintaining clear accounts is strongly advised.
What happens if the SCI fails to meet its obligations?
Failing to hold an AGM or maintain accounts can lead the tax authorities to treat the SCI as a fictitious company. The consequences are serious:
- reintegration of the property into each partner’s personal assets
- immediate taxation of unrealised capital gains
- personal, joint liability for all SCI debts
- potential dissolution of the company
There are also penalties for failing to file annual accounts with the Commercial Court registry: fines of €1500, rising to €3000 for repeat offences. The limitation period for these offences is one year from the filing deadline.
Common pitfalls in practice
Our experience at Tees shows that many British clients who set up an SCI to buy a French home later overlook the SCI’s ongoing corporate life. This often leads to expensive problems. We have seen cases involving:
- informal or “verbal” share transfers, which are legally invalid
- the death of a shareholder before proper formalities were completed
- companies struck off the register due to lack of filings, leaving property impossible to sell
- reconstruction of years of missing accounts at significant cost
These issues create delays, disputes and administrative barriers, often at the point when the property needs to be sold or transferred.
Giving you the full picture
Tees support SCI owners with all aspects of their company’s legal and administrative life. This includes:
- preparing notices, minutes and documentation for annual meetings
- formalising share transfers and updating the statutes
- assisting with the sale of SCI-owned property
- liaising with accountants and French professionals where needed
- ensuring decisions are legally valid and enforceable
We aim to keep your SCI compliant and functioning smoothly, avoiding the risks that arise when corporate formalities are overlooked.
