Approval Clauses in a French SAS: How to Control Who Joins Your Cap Table

Approval clauses in a French SAS: controlling who joins the cap table

Without an approval clause in its bylaws, a French SAS runs on free transferability — any shareholder can sell to anyone. The approval clause (clause d'agrément) reverses the default: the transfers the bylaws designate require the company's prior approval (C. com. Art. L 227-14), and a transfer made in breach is void (Art. L 227-15). It is the foundational cap-table control — and in the SAS it reaches further than in any other French form, covering, where the drafting says so, even successions, matrimonial liquidations and transfers to a spouse or descendants.

This guide covers what the clause does and its legal basis, the scope choices, the decision body and the selling shareholder's right to vote, the procedure and its deadlines, what happens on a refusal — where the SAS regime has a trap the SA does not — the price-setting mechanisms including the Art. 1843-4 expert, and the nullity sanction. For the wider architecture, see our pacte-versus-bylaws guide; for the neighbouring clauses (lock-ups, exclusion, change of control), see their dedicated guides.

What the clause does and where its force comes from

The bylaws may subject any share transfer to the company's prior approval (C. com. Art. L 227-14). The mechanism shifts cap-table control from the individual seller to the company: the seller notifies the proposed transfer, the designated organ decides within the bylaws-set window, and on approval the transfer proceeds — on refusal, the bylaws-organised alternative runs. Three structural rules give the clause its force:

The bylaws are the only effective home. An agrément living solely in a pacte yields damages while the transfer stands; only the statutory clause carries the Art. L 227-15 nullity — though a statutory clause referring to a pacte restriction can import the sanction (Cass. com. 27 June 2018, n° 16-14097).

« Toute cession » means what it says. Unlike the SA, the SAS clause can capture transfers between shareholders, successions, the liquidation of a matrimonial regime, and transfers to a spouse, ascendant or descendant — the ANSA expressly admits subjecting an heir's entry to approval (ANSA, comité juridique of 1 December 2010, n° 10-070), with the exclusion clause offered as the alternative route for unwanted heirs. Universal transmissions (mergers, demergers) are outside the clause in principle (Cass. com. 19 April 1972), unless the drafting covers « any transmission » — which courts have read as reaching a merger (Cass. com. 6 May 2003, n° 01-12567); an intuitu personae SAS drafts the fusion case expressly, with a condition-precedent mechanism and organised buy-back consequences.

Adoption and modification follow the bylaws' own majority. Since Ord. 2017-747 of 4 May 2017, introducing or amending an agrément clause is a collective decision taken in the conditions and forms the bylaws provide — unanimity was required only before 6 May 2017 (C. com. Art. L 227-19). Installing the clause at incorporation remains best practice: the drafting is negotiated once, while the table is aligned, and mentioned in the incorporation legal notice.

One quality rule governs the approval itself: when given, it must be pure and simple — conditions attached by the approving organ are deemed unwritten (Cass. com. 17 January 2012, n° 09-17212).

The scope: which transfers need approval

The bylaws draw the perimeter, and the standard dials are:

• Transfers to third parties — the core case, closing the table to outsiders;
• Transfers between shareholders — added where the founders want to control the internal balance of the table and prevent block-building; omitted where internal fluidity is preferred;
• Family and succession transfers — coverable in the SAS (with heirs required to prove their status), or carved out for family companies that want free intra-family movement; the drafting can also exempt heirs who are already shareholders;
• Intra-group reorganisations — commonly carved out (a non-agrément clause for transfers within the group or to controlled subsidiaries), the control not really changing;
• Asymmetric designs — approval by category (class A approving class B's transfers), approval imposed only on the minority, or a dispense for a financial investor's exit shares — a carve-out investors routinely demand;
• Adjacent operations — the clause can be extended to cash capital increases and to transfers of preferential subscription rights (or only to the definitive allotment of the new shares), and should be paired with a change-of-control clause (Art. L 227-17) for corporate shareholders, since the agrément does not catch a change in a shareholder's own ownership.

An effective clause is drafted wide on the operation — covering every mutation whatever its nature or form, including transfers of bare ownership or usufruct — then calibrated by carve-outs. Where a pre-emption clause coexists, the two procedures must be sequenced (pre-emption first, agrément on what remains is the usual order), with compatible deadlines and identical covered operations — clumsy stacking produces contradictions and can, in effect, strip the seller of any right to change their mind.

The decision body — and the seller's right to vote

The bylaws choose the organ: the collectivity of the shareholders (the broadest legitimacy, at whatever majority the bylaws set); a committee; a group or category of shareholders (each class approving the other's transfers, or its own); or the president — the simplest route, with one drafting caution: provide for the case where the president sells their own shares, ideally routing that approval to the shareholders, since in the bylaws' silence case law analogies suggest the president could approve their own transfer.

One design temptation is unlawful: the selling shareholder cannot be stripped of their vote. The right to take part in collective decisions implies the right to vote, and SAS bylaws can derogate only in the cases the law provides (Cass. com. 23 October 2007, n° 06-16537; Cass. com. 9 February 1999, n° 96-17661) — Art. L 227-14 contains no such case, so a clause excluding the seller from the agrément vote is exposed. The balance is struck instead through the majority design (the seller rarely carries the vote alone), category-approval structures, or a president-decided procedure. The majority itself is free — simple, reinforced, or a defined block's consent — computed on the voting rights as the bylaws organise them.

Which agrément design fits your company?

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The procedure: notification, decision window, defaults

The notification. The seller notifies the company of the project in the bylaws-set form, identifying the transferee, the number of shares, the price and terms — the information the organ needs to decide on the person of the buyer, which is what the clause is about.

The decision window and its default. The bylaws fix the deadline for the organ's decision and — the clause the treatise calls indispensable — the period after which, absent both an approval and a purchase offer, the seller may transfer freely. That free-transfer fallback is the seller's protection against being trapped; whether silence within the initial window counts as approval or refusal is itself a bylaws choice, calibrated to whichever side the drafters mean to protect. The decision, notified in the bylaws-set form, needs no reasons unless the bylaws require them; an approval, once given, is unconditional (conditions deemed unwritten).

Practical sequences. At a funding round, the approval of the incoming investor folds into the round's collective decision, keeping the closing timeline tight without departing from the bylaws. Where pre-emption and agrément coexist, pre-emption usually clears first. And a seller's right of repentance — withdrawing the sale project on a refusal or on an unsatisfactory buy-out price — exists in the SAS only if the bylaws create it: the SA's statutory repentance right has no SAS counterpart.

Refusal of approval: the SAS trap and how to draft around it

Here sits the regime's least-known feature. In the SA, a refusal triggers a statutory machine: the shares must be bought within a set period by a shareholder, a third party or the company itself (C. com. Art. L 228-24). In the SAS, no text organises the refusal's consequences — and the Cour de cassation has declined to hold that Art. L 228-24 applies to an SAS agrément (Cass. com. 8 March 2018, n° 17-40079). A refusal under silent bylaws therefore opens a heavy dispute, with the seller invoking the fundamental right of every shareholder to exit their investment.

The drafting answer is to rebuild the SA's solutions statutorily, adapted to the SAS's organs:

• The buy-out cascade — the shares are acquired, at the company's initiative, by one or more shareholders, by an approved third party, or by the company itself with the seller's consent, in the priority order the bylaws choose;
• The deadline — a defined period from the refusal (practice commonly works in the order of three months, as the treatise suggests for pre-emption clauses) after which, absent a completed purchase, the seller transfers freely to the originally proposed buyer;
• The company-buy-back specifics — a buy-back on refusal is a lawful exception to the self-purchase prohibition, but the company must sell or cancel the repurchased shares within six months (C. com. Art. L 227-18), cancellation meaning a capital reduction (part of the doctrine urging the offer-to-all procedure of Art. R 225-153 for it); an offer received after the six-month window, or one manifestly below value, can be set aside by the president without a shareholder vote (Cass. com. 18 September 2019, n° 17-18143);
• The bindingness of the offer — once the company's buy-out proposal (price to be fixed by expert) is accepted by the seller, the company cannot retract: there is agreement on the thing and on the price modalities (Cass. com. 4 January 2023, n° 21-10035);
• The seller's repentance right — if wanted, written in expressly.

The buy-out price: agreement, formula, or the Art. 1843-4 expert

Agreement is the first route — the buy-out often runs at the price and terms the seller notified. Where agreement fails, the bylaws' fallback decides everything.

A bylaws formula — book value, a multiple, an accounts-based computation — gives predictability at the cost of accuracy: a growth company priced at book value exits its seller far below reality, and a distressed company's formula can go to zero. Floors and switch-to-expert triggers manage the edges.

The expert (C. civ. Art. 1843-4, or a contractually designated valuer under Art. 1592) prices the shares where the parties disagree. The 1843-4 expert — party-appointed, or court-appointed failing agreement — renders a valuation binding on both sides, contestable only for gross error; since the 2014 reform of the article, the expert applies the valuation rules the bylaws or the parties' agreements provide, where they exist. The mechanism is the most defensible and the slowest; drafting should say precisely when it opens and what instructions bind it.

Payment mechanics complete the clause: timing (immediate or instalments, with security for the unpaid balance), the signature of the transfer orders, and the treatment of fractional allocations where several buyers step in.

The sanction: transfers in breach are void

Any transfer made in violation of the SAS's bylaws clauses is null (C. com. Art. L 227-15). The buyer never becomes a shareholder: the company refuses the register movement, no votes and no dividends attach, and the cap table stands as before — the court confirming the position where the buyer disputes it. The nullity is absolute in nature, with a standing nuance: an evicted acquirer cannot invoke a statutory pre-emption's breach (Cass. com. 2 February 2016, n° 14-20747), and case law from other forms reserving the action to the shareholders whose consent was required awaits confirmation for the SAS.

The contrast with the pacte is the whole point: a pacte-only agrément leaves the transfer standing and pays damages; the statutory clause stops the transfer itself — and a statutory clause referring to a pacte restriction imports the same sanction to it (Cass. com. 27 June 2018, n° 16-14097). The disappointed buyer's remedies lie against the seller, on the failed delivery; the seller keeps the shares and can restart the procedure properly.

One boundary keeps the mechanism honest: the clause controls entry, it cannot abolish exit. A refusal system operated to lock a shareholder in indefinitely — no approval, no buy-out, no free-transfer fallback — invites the abuse-of-majority and fundamental-right-to-exit arguments that the missing-statute context makes potent. The organised cascade with its deadline is not just good drafting; it is what keeps the clause enforceable in practice.

Approval was refused — what happens next in your bylaws?

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Frequently asked questions about approval clauses in a French SAS

This article is for general information only and states French law as published in the sources available at the date shown above. It does not constitute legal advice. The right agrément design depends on the cap table, the founders' objectives, and the company's trajectory. Always seek qualified legal advice before drafting or invoking an approval clause in a French company.