Different types of agricultural companies

Farming, including its legal aspects, is changing all the time.
Whether you operate a smallholding or farm thousands of acres, you want your farm to be as profitable as possible. How can you transfer your farm without misunderstandings arising ?

• Why create an agricultural company?

  • Given the financial risks at stake, it may be wisest to start a company.

  • But the type of company you choose will depend on your objectives.

  • Creating a company can be a way of pooling equipment, financial and human resources. Moreover because a company does not die, it can ensure the durability of your undertaking and facilitate the gradual transfer of the farm (it is easier to sell off a few shares than divide up your farm machinery or herd of livestock).

  • Lastly, your personal property and business property are separate as are the operating capital and the land assets.

• There are three major types of agricultural company:

  • Landholding companies:
    The purpose of agricultural land groupings (GFA) is to create or preserve one or more farms.
    At least two partners are required (husband and wife, for example).
    A GFA enables people to preserve land holdings outside the strict definition of the farm.

  • Farm management or running companies:
    Their aim is to manage or run a farm or to undertake joint work, sometimes under conditions comparable to those of a family farm, particularly in terms of social benefits.
    
    The commonest are:
    - the civil farming company (société civile d’exploitation agricole, or SCEA)
    -  the cooperative farming group (groupement agricole d’exploitation en commun, or GAEC)
    - and the private limited liability farm corporation (exploitation agricole à responsabilité limitée, or EARL).
    
    All of these forms require only two partners. However, in a GAEC, all the partners must be farmers, whereas in an SCEA or an EARL non-farming partners are permitted.

  • Commercial companies:
    They are sometimes found in the farming sector, such as
    - the economic interest group (groupement d’intérêt économique, or GIE), whose purpose is to facilitate and expand the operations of its members;
    - the general partnership (société en nom collectif, or SNC);
    - the private limited liability company (société à responsabilité limitée, or SARL)
    - and the public limited liability company (société anonyme, or SA).

  • For all of these company forms, it is essential to receive advice from an expert. You need to choose the type of company that is best suited to the specific needs of your farming business.

  • Careful, the self-employed person status is not allowed for people involved in agriculture.

• Find a notaire

  • Your goals and resources need to be assessed in detail. Your notaire, who is a specialist in family and property law, will provide guidance on both legal and tax issues.