Death of the company leader: what happens to the company and the steps to take

When a business owner dies without having made any planning, the applicable legal provisions apply, and these vary depending on the business structure. In a sole proprietorship, the heirs do not receive a transfer of power: the business is passed on to them, and they decide whether or not to continue its operations. In a company, the shares are transferred jointly to the heirs. For tax purposes, the inheritance tax return must be filed within six months of the death.

This page describes the steps outlined in our sources, without going into detail. The section on governance is based on a Bpifrance Création page dated November 2023, prior to the 2026 amendments to the Dutreil pact; the section on deadlines is based on official documents from 2025 and 2026. Formalities with the commercial court registry, VAT and business property tax rules, joint management of SARLs (limited liability companies), and the role of an approval clause for heirs are not addressed: we were unable to find a suitable source.

What happens depends on the type of company

Sole proprietorship. According to Bpifrance Création, the heirs do not benefit from a transfer of power. The company is passed on to the heirs, who then decide whether or not to continue the business.

Company. Shares or stock are transferred jointly to the heirs, who may become partners, unless they renounce the inheritance and unless there is a contrary statutory clause.

Several partners. One of them must convene a general meeting to formally acknowledge the death of the company's director. The page also mentions the appointment of an ad hoc representative, which it describes as a preventative procedure for resolving difficulties, intended for companies that are not yet insolvent. It does not specify a timeframe for the meeting or for this appointment.

Collegial leadership. In the case of a collegial management, for example a SAS, the replacement of a manager is optional, unless otherwise provided in the articles of association.

Appoint a new leader. This involves statutory changes and certain administrative procedures. Bpifrance Création does not provide details on the actions or deadlines.

Anticipating: what a leader can foresee during their lifetime

Bpifrance Création describes several tools:

• A will. The manager can write a will, which allows him to define the fate of the company.
• The statutes. They can provide for the replacement of the manager, including the appointment of a provisional administrator in SAS, SA and SARL companies, and designate a manager in advance.
• A posthumous mandate. The deceased's heirs must appoint an agent during their lifetime to manage their assets on behalf of their heirs. This appointment is formalized by a notarial deed. The agent can be anyone other than the notary handling the estate and must not be subject to any legal prohibition against managing assets.
• A key man contract. It aims to compensate a company for the loss, whether temporary or permanent, of a key employee. Coverage varies depending on the contract; the Bpifrance Création website does not specify the coverage level.
• The Dutreil pact. Shares or units of eligible companies are exempt from gift tax up to 75% of their value, subject to conditions (eligible activity, collective commitment, individual commitment, management function), according to the BOFiP in force since August 10, 2026. The specific conditions were modified in 2026: this page refers to the firm's page dedicated to the Dutreil pact.

The tax and inheritance calendar

Several time limits apply from the date of death, according to impots.gouv.fr and service-public.gouv.fr:

• Statements of results. When business operations cease following the death of the business owner, the heirs have six months to file these declarations. The deceased's income tax return for the year of death must be filed within the standard deadline.
• Death of the employer. The salary declaration must be filed within six months of the death, but no later than January 31 of the following year. The payroll tax return (form no. 2502-SD) must also be filed within six months of the death, but no later than January 15 of the following year.
• Declaration of inheritance. It must be filed within 6 months of the date of death in metropolitan France, at the public finance center of the deceased's residence; form F80 specifies 12 months for deaths abroad (wording to be verified with the source). When several heirs are jointly liable for payment, only one of them needs to file the declaration.
• Payment of duties. The fees are payable at the same time as the declaration is filed. Late payment interest is 0.20 % per month, or 2.4 % per year; surcharges of 10 % to 80 % exist depending on the situation.
• Inheritance option. No one can force an heir to exercise the option for four months. After that, according to information sheet F1199, the estate's creditors, co-heirs, subsequent heirs, or the State can, through extrajudicial means, compel the heir to make a choice. The heir then has two months to make their choice or request an extension from the judge; otherwise, they are considered to have accepted the inheritance unconditionally. In the absence of such an action, they have a maximum of ten years to renounce the inheritance. Renunciation is made at the registry of the court of the deceased's last residence or before a notary. Acceptance limited to the net assets restricts the payment of debts to the value of the deceased's property.

Joint ownership and inheritance rights in the direct line

According to the fact sheet on service-public.gouv.fr (F1296), decisions concerning jointly owned property are made either unanimously or by a two-thirds majority; details of these cases can be found in the fact sheet. All heirs must agree to appoint a representative, who reports annually on their management. The service-public.gouv.fr fact sheet cites a law of April 7, 2026, as a reference without describing its content: this page does not address it.

In direct line, the allowance is €100,000 per child and for each of the two parents. The scale is 5 % up to €8,072, 10 % up to €12,109, 15 % up to €15,932, 20 % up to €552,324, 30 % up to €902,838, 40 % up to €1,805,677, 45 % beyond.

Death of the executive: a numerical example (fictitious profile)

Situation. A self-employed craftsman, employing a few staff, dies on September 22, 2026. His estate is worth €600,000. He leaves two children, who inherit equally, and no other assets. He made no prior gifts. Payments are calculated from the date of death. These assumptions are based on a hypothetical scenario.

Issue. What time limits apply, and what rights should the heirs anticipate?

Strategy. The firm establishes a timetable with the heirs from the date of death, classifies the steps by deadline and calculates the rights in direct line, before the heirs take a position on the continuation of the business.

Result.

January 31, 2027 falls on a Sunday: any possible postponement rules are not addressed here and should be verified with the source.

Each child receives €300,000. After the €100,000 allowance, the base amount is €200,000, resulting in €38,194.35 in benefits per child and a total of €76,388.70. Late payment would incur monthly interest of €152.78 at a rate of 0.20% on this total, amounting to €305.55 for two months.

This profile is fictitious. The calculation does not take into account life insurance, debts, expenses, any potential Dutreil agreement, or a bequest. The salary and payroll tax deferrals apply to the death of a self-employed business owner. The figures illustrate the mechanism and do not guarantee any outcome for your specific situation.

Death of the executive: what changes depending on your case

• The form of the business: sole proprietorship or company, and type of company.
• The statutes: replacement clauses, provisional administrator, contrary statutory clause.
• The number of partners and the manager's share of the capital.
• The place of death (France or abroad), which can change the deadline for filing the inheritance tax return (wording of form F80 to be checked).
• The presence of employees, which conditions the declarations of wages and payroll tax.
• The relationship between the leader and his heirs.
• Anticipations already in place: will, posthumous mandate, key man contract, Dutreil pact.

The rule depends on your situation. No results are guaranteed.