Class Votes and Special Meetings for Preferred Shareholders in a French SAS

Class protection for preference shares: what the SAS actually guarantees

When a French SAS issues preference shares (actions de préférence, Arts. L 228-11 ff. of the Commercial Code), the holders of each class expect what investors expect everywhere: that the rights they negotiated cannot be rewritten later by a majority they do not control. In the société anonyme, that expectation rests on a statutory body — the assemblée spéciale of the class, whose approval conditions any modification of the class's rights. In the SAS, the ground is different, and misreading it is the most common drafting error in French venture documentation: the mandatory special-meeting regime is not clearly applicable to the SAS, and the class protection is, to a large extent, what the bylaws make it.

Two rules do the heavy lifting whatever the bylaws say — where the bylaws are silent, touching a class's rights requires the individual consent of every holder; and the holders of the affected preference shares are barred from the collective vote modifying their own rights (C. com. Art. L 228-15; Cass. com. 10 July 2024, n° 22-15836). This guide covers that legal base, the consultation machinery well-drafted SAS bylaws build, when class consent is needed — modification, conversion, redemption, capital operations, mergers — the form, quorum and majority choices, the contractual extensions investors negotiate, and the sanctions. For the design of the preference rights themselves, see our guides to raising capital in an SAS and to negotiating SAS bylaws.

The legal base: a faculty, a silence rule, and a vote exclusion

Three texts frame the class-protection question in the SAS, and none of them delivers the SA's ready-made machinery.

The special-meeting texts apply uneasily. Art. L 228-19 gives preference shareholders, gathered in a special meeting, the faculty to commission the company's auditor — where one exists — to prepare a special report on the company's compliance with the particular rights attached to the shares; the report is held at the registered office at least fifteen days before the special meeting where it is presented, at the company's expense (Arts. R 228-21 and R 228-22). That faculty applies to an SAS that has issued preference shares. But the holding of a special meeting as a mandatory approval body — the SA's L 225-99 mechanism — does not clearly impose itself on the SAS, unless one treats the entire preference-share apparatus as mandatory; the question is not settled, and the treatise's advice, pending a settled solution, is exactly what careful practice does: write the class-consultation rules into the bylaws.

Silence is the worst drafting. The SAS bylaws can freely provide the conditions for modifying the rights attached to preference shares. Where they provide nothing, the fallback is not majority rule — it is the individual agreement of each holder, required even where the change does not increase their obligations but merely reduces their rights. A single Series A holder with three shares can then block a recapitalisation every other shareholder wants. The bylaws-organised class consultation is not a concession to investors; it is what makes the class governable at all.

The affected holders sit out the collective vote. The holders of the preference shares whose rights are being modified cannot take part in the general vote of the shareholders on that modification (C. com. Art. L 228-15) — the modification follows the same procedure as a conversion of their shares into another category, as the Cour de cassation has confirmed (Cass. com. 10 July 2024, n° 22-15836). The exclusion is statutory — which is what distinguishes it from the vote-stripping clauses the case law strikes down in exclusion procedures: here the law itself, not the drafting, removes the conflicted votes. The same logic governs the mirror operation: shareholders whose ordinary shares are to be converted into preference shares cannot vote on the creation of the category, on pain of nullity of the deliberation, their shares excluded from quorum and majority — unless all shares are being converted (Art. L 228-15, al. 2).

The two-track decision the bylaws should organise

Because the affected class is barred from the collective vote, every modification of class rights runs on two tracks that the bylaws must articulate: the collective decision of the shareholders — voted without the affected holders — deciding the modification and the bylaws amendment recording it; and the class consultation — the affected holders approving, through the mechanism the bylaws install, what the others have decided about their rights. The treatise's drafting checklist for the class track is short and complete:

• The consultation modes admitted — meeting, written consultation, unanimous instrument, videoconference — and the organ that convenes or takes the initiative of the consultation;
• The majority rules, and any quorum — the SAS fixes them freely for the class, from simple majority of the class's votes to unanimity of the holders;
• The articulation between the two tracks — which goes first, the deadlines between the two consultations, and the moment at which the decision carrying the modification becomes definitive.

That last item is the one practitioners under-draft. Run the class consultation first and the collective decision ratifies a change the class has cleared; run the collective decision first and it remains suspended — not definitive — until the class approves; leave the order and the timing unsaid and every disputed modification becomes an argument about whether it ever took effect. Investor documentation usually convenes the two in one notice, the class deciding immediately before the collective decision, so the outcome feeds directly into the vote and the amendment is definitive the same day.

Where several classes are affected, each class is consulted separately under its own rules — one refusing class blocks the modification of its own rights, without preventing changes that touch only the classes that approved. And one voting-rights subtlety protects the design: a preference share deprived of voting rights in the general collective decisions still votes in the special assemblies of its class — the deprivation does not follow the share into its own class's consultation.

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When class consent is in play — operation by operation

Direct modification of the class's rights. The core case: reducing a priority dividend, reworking a liquidation preference, altering a ratchet or a veto. The affected holders cannot vote in the collective decision; their approval runs through the bylaws' class consultation — or, in the bylaws' silence, through each holder's individual consent. The Cour de cassation treats any modification of the rights as subject to the same procedure as a conversion into another category (Cass. com. 10 July 2024, n° 22-15836).

Conversion into ordinary shares or another category. Preference shares can be converted, by decision of the collectivity of the shareholders on a special auditor's report, into ordinary shares or into preference shares of another category (Arts. L 228-12 and L 228-14). Two regimes follow. Where the bylaws fixed the financial modalities in advance — the computation or determination method for the value of the preference rights, expert appraisal admitted as one route — the president or authorised organ executes the conversion in the statutory conditions and draws up a report. Where the bylaws fixed nothing, the conversion modalities must be approved by the affected holders, under the bylaws' consultation rules, with the bylaws then amended and the president reporting on the modalities (Art. R 228-20). Either way the president's report states the conversion ratio's computation and the operation's incidence on shareholders, the auditor opining on its accuracy (Art. R 228-18); the conversion decision entails waiver of the preferential subscription right to the shares issued on conversion (Art. L 225-132, applicable to the SAS); and a conversion producing a capital reduction not motivated by losses opens the creditors' twenty-day opposition window, the operation unable to begin while it runs (Arts. L 228-14 and R 228-15). The ANSA adds a drafting instruction: conversion into ordinary shares is a modification of the rights attached to the converted shares, not an issuance of new shares, and the collective decision should state clearly whether the particular rights are maintained or not (ANSA n° 24-020).

Capital operations, mergers, demergers. On a capital increase, reduction or amortisation, it is the collectivity of the shareholders that determines the incidence of the operation on the preference holders' rights — or the bylaws record it — the law imposing no precise safeguard beyond the company's duty to preserve the holders' rights (Art. L 228-16). On a merger or demerger, the preference shares can be exchanged for shares of the beneficiary companies carrying equivalent particular rights, or on a specific exchange parity accounting for the rights given up (Art. L 228-17) — the class's negotiated position converts into either equivalence or price, and the well-advised class negotiates which.

Where other special assemblies intervene. Convertible instruments have their own collective body: where the company has issued securities giving access to capital and a new preference issuance would modify the profit-distribution rules or amortise the capital, the operation must be authorised in the issuance contract or by the special meeting of those securities' holders (Arts. L 228-98 and L 228-103) — a different assembly, protecting a different constituency, that closing checklists regularly confuse with the preference class's own consultation.

Form, quorum, majority: designing the class consultation

Because the SAS statute leaves the class machinery to the bylaws, every dial is a negotiation at the round. The form: physical or video meeting, written consultation, unanimous signed instrument — most structures admit them all, with the convening initiative given to the president and, frequently, to holders of a stated fraction of the class. The quorum: the SAS can impose one, tier it (higher on first call, lower on second), or dispense with it — a class scattered across funds and angels benefits from a second-call mechanism that prevents paralysis by absence. The majority: simple majority of the class's votes cast for routine adjustments, a qualified majority for substantive modifications, unanimity where each holder is meant to keep a personal veto — and the bylaws can differentiate by decision type. The voting weight: one share, one vote is the default design inside the class, and a share deprived of voting rights in the general decisions still votes in its class's special assembly — the deprivation does not cross that boundary.

Two design warnings from practice. First, the class-consultation rules should mirror the proof discipline of any SAS decision: notice describing the modification, its rationale and its impact; a record of the vote; minutes in the decisions register — the auditor's special report of Art. L 228-19, where commissioned, is held at the registered office fifteen days before the special meeting that hears it. Second, resist the temptation to make every threshold unanimity: the silence default already gives each holder an individual veto, and the whole point of organising the class is to replace that veto with a governable collective rule. Unanimity drafted into the class consultation reproduces the problem the drafting was meant to solve.

Beyond rights modifications: the contractual extensions

Nothing stops the bylaws from giving a class a consultation right over matters that do not modify its rights — and investor documentation routinely does, converting the class consultation into a governance instrument:

• Senior issuances — the class's approval for creating a new category ranking ahead of it (the Series B with a senior liquidation preference), the classic anti-layering protection;
• Reserved matters at class level — acquisitions, disposals or indebtedness above thresholds, changes to the business perimeter, exit decisions below a stated valuation;
• Priority-dividend discipline — class approval before any distribution to ordinary shares while the priority dividend is unpaid;
• Leadership and information — consultation on the appointment or removal of key executives, and the reinforced information and prior-communication rights the treatise lists among the non-pecuniary preferences an SAS can attach to a class, up to and including a veto.

Two disciplines keep the architecture workable. Coordinate the layers: the same reserved matter should not sit with a board committee, the class and the collective decision under three procedures — assign each matter one home and make the others defer. And ration the vetoes: a cap table where every significant act needs two class consultations does not protect the investor, it stalls the company — a warning that applies to classes as much as to boards. Where the pacte duplicates class protections contractually, remember the hierarchy: the bylaws bind the company and carry the statutory sanctions; the pacte binds its signatories and yields damages — our guide to the pacte-versus-bylaws split covers which promise belongs where.

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Redemption: the two regimes and where holder consent sits

The buy-back of preference shares runs under one of two regimes (Art. L 228-12). Under the common-law regime — applicable in the bylaws' silence — the ordinary buy-back framework of Arts. L 225-204 to L 225-214 governs both the implementation and the purposes. Under the statutory-redemption regime — where the bylaws created the class as redeemable and organised the modalities before subscription — the company can redeem on the pre-established conditions without seeking the holders' agreement at the moment of redemption: the consent was given at subscription, embedded in the class's terms.

The statutory regime carries its own guard-rails: after the buy-back the company cannot hold more than 10 % of its own shares nor more than 10 % of any given class, the shares held being registered and fully paid; the buy-back cannot bring shareholders' equity below capital plus non-distributable reserves; the held shares carry no dividend, no vote and no preferential subscription right; the purchase runs only on distributable sums, with reserves at least equal to the nominal value of the redeemed preference shares; equality between holders in an analogous situation must be respected; and the registers and shareholder information follow the specific modalities the decrees organise. For preference shares issued since 23 May 2019, the bylaws say whose hand is on the trigger — redemption at the company's exclusive initiative, at the joint initiative of company and holder, or at the holder's exclusive initiative, on the rules, conditions and deadlines the bylaws fix; where the bylaws did not organise the redemption conditions, the president's report must set out the conditions, the justification and computation of the proposed price and the operation's incidence on holders, and under the statutory regime a redemption notice stating the essential modalities is held at the registered office and the commercial-court registry fifteen days before completion.

The drafting consequence mirrors the conversion analysis: pre-established modalities make the operation executable without a fresh class decision; improvised redemptions put the price, the procedure and the equality of treatment all in play at once — with the class consultation, where the bylaws organise one, as the forum where the argument happens.

Sanctions: what happens when the machinery is ignored

The sanction map follows the source of each rule. A conversion of ordinary shares into preference shares voted with the participation of the shareholders whose shares are being converted is sanctioned by the nullity of the deliberation — the statute says so expressly (Art. L 228-15, al. 2) — and the same vote-exclusion logic guards the collective decision modifying a class's rights. A modification pushed through without the bylaws' class consultation, or without the individual consents the bylaws' silence makes necessary, is a decision taken in violation of the applicable rules, exposed to annulment and to the damages claims of the holders whose rights were overridden. A conversion entangled with a capital reduction ignores the creditors' opposition window at its peril — the operation cannot begin while the twenty days run.

Two overlays complete the picture. The auditor's special report of Art. L 228-19 — where the class commissions it — documents whether the company has respected the particular rights and, where it has not, since when: a ready-made evidentiary file for any challenge. And the nullity regime itself has changed: for nullity actions arising from 1 October 2025, ordinance 2025-229 of 12 March 2025 governs, with a prescription reduced from three years to two (C. civ. Art. 1844-14, as amended) and transitional rules for actions born earlier. The practical rule for companies is unchanged by the reform: run the two tracks in the drafted order, document both, and treat the class consultation as a condition of effectiveness, not a formality.

Frequently asked questions about preferred-share class votes 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 class-protection design depends on the cap table, the preference architecture and the company's trajectory. Always seek qualified legal advice before creating, modifying or invoking preference-share class machinery in a French company.