Earning Shares for Work, Not Cash: Apports en Industrie

Equity for work in a French SAS: shares against expertise, not cash

A technical co-founder, a senior expert, a consultant, a designer — the right person to bring into a French company sometimes has no cash to put on the table, but has expertise the company cannot replicate by hiring. The SAS lets the company issue shares against that contribution directly. The mechanism is called apports en industrie — shares for services and know-how — and the SAS is the French commercial form that gives founders the most freedom to design it.

This guide covers what apports en industrie are, when they fit better than salary or stock options, the mandatory rules the bylaws cannot bend, and how to draft the clause so the contributor's commitment and the company's protection both hold.

What "equity for work" means in a French SAS

Apports en industrie — the French legal term for what a foreign founder calls equity for work or sweat equity — is the contribution of services, labour, technical skills, or know-how to a company in exchange for shares (Art. L 227-1 al. 4 of the Commercial Code). The contributor undertakes to perform defined services for the company over time; the company issues shares against that undertaking. The contributor becomes a shareholder on day one, with the rights the bylaws assign to those shares.

Three features distinguish apports en industrie shares from ordinary cash- or in-kind-funded shares:

• The shares are inalienable. The contributor cannot sell or transfer them. They stay in the contributor's name, personal to him, for as long as they exist.
• They do not add to the stated capital (C. civ. Art. 1843-2). The K-bis shows only the cash and in-kind capital. The apports en industrie shares exist in parallel, with their own line on the cap table.
• They are tied to performance. The contributor must perform the services committed, and the bylaws organise what happens to the shares when performance stops.

These features are mandatory and cannot be derogated from in the bylaws. Everything else — the rights attached to the shares, the duration of the commitment, the cancellation mechanics, the exit terms on departure — is left to the bylaws to design. One default deserves attention before any drafting: where the bylaws are silent on the economics, the service contributor's share of profits and losses equals that of the shareholder who contributed the least (C. civ. Art. 1844-1) — rarely what either side intended.

When equity for work makes sense in a French SAS

Apports en industrie fit a narrow set of founder situations, but in those situations they fit well.

A technical co-founder who cannot put cash in. The classic case: one founder funds the company with cash; the other contributes the technical work. Without apports en industrie, the only way to give the technical co-founder equity is to issue ordinary shares free of charge — which raises tax questions on the recipient side — or to defer compensation through a stock-option mechanism. Apports en industrie gives the technical co-founder real equity from day one, with voting and economic rights, as a direct contribution.

A senior expert whose presence on the cap table matters more than salary. A scientific advisor, a domain specialist, an industry veteran whose endorsement is part of the company's commercial proposition. Apports en industrie lets the company recognise the contribution as equity rather than as a consultancy fee.

A designer, an architect, a creator whose work is the asset. Where the work delivered is the company's product or a substantial part of it, apports en industrie aligns the contributor's interests with the company's growth. The contributor is paid in the company's success rather than in invoices.

A founder with a key client portfolio or a key supplier relationship. Where the contribution is the relationship, not the cash, apports en industrie lets the relationship-holder become a shareholder on commercial terms.

The mechanism does not fit broad employee equity. For a wider workforce, French companies use founder share warrants (BSPCE), share-purchase plans, or free-share grants — instruments that scale to many recipients with their own tax treatment. Apports en industrie is contributor-by-contributor, designed for a small number of named individuals whose contribution is known and described in the bylaws.

Is equity for work the right instrument for your French SAS?

Pick the situation closest to yours and see which equity instrument fits — and the point to settle before drafting.

How equity for work compares to cash and in-kind contributions

A French SAS can issue shares against three types of contribution.

Cash contributions (apports en numéraire) are the most common. The contributor pays cash; the company receives the funds; the shares are issued. Half of the par value must be paid in on subscription, with the balance called within five years of registration (Art. L 225-3 of the Commercial Code).

In-kind contributions (apports en nature) transfer ownership of an asset to the company in exchange for shares — equipment, intellectual property, real estate, a fonds de commerce. The asset enters the company's balance sheet at its agreed value. An outside valuer (commissaire aux apports) reports on the valuation unless the founders unanimously waive one where no single contribution exceeds €30,000 and the in-kind total stays within half the capital.

Apports en industrie transfer services and know-how. There is no cash, no asset transfer. The contributor undertakes to perform; the company issues inalienable shares against the undertaking. Since 2019, no outside valuation is required for the contribution itself.

The three forms can run in parallel at the same incorporation — with one limit: the company cannot be formed from apports en industrie alone; there must be some cash or in-kind capital. A founder can subscribe €30,000 in cash, contribute €15,000 of in-kind capital, and issue apports en industrie shares to a technical co-founder, all in the same set of bylaws. The cap table reflects each contribution separately, the K-bis shows the cash and in-kind capital, and the apports en industrie shares appear in the bylaws and in the company's share register but not in the published capital figure.

The cap-table difference that matters is that apports en industrie shares dilute the cash and in-kind shareholders without adding capital. A company funded €100,000 in cash and issuing 1,000 apports en industrie shares against 1,000 cash shares effectively gives the apports en industrie contributor 50 % of the voting and economic rights without putting any cash in. The cash shareholders' return is split with the contributor on every dividend and every exit. The bylaws should therefore set the proportion of apports en industrie shares deliberately — not as a small bonus, not as a hidden cost.

Cap-table simulator: what equity for work costs the cash shareholders

Enter the capital shares and the planned apports en industrie shares, and see the contributor's slice of votes and economics — with the published capital unchanged.

The rules that apply to equity-for-work shares in a French SAS

Three rules are mandatory and cannot be bent in the bylaws.

Inalienability. The shares cannot be sold or transferred. They are personal to the contributor and are not transmissible. If the contributor wants out, the only path is the exit mechanism the bylaws set for the company or for the other shareholders.

No contribution to stated capital. The shares do not add to the capital figure published on the K-bis (C. civ. Art. 1843-2). The capital published is the sum of cash and in-kind contributions only. Apports en industrie shares are issued against an undertaking to perform, not against an asset the company's creditors could reach; the Civil Code keeps them outside the stated capital for that reason.

Performance commitment. The contribution is typically a continuing service — it can also be a one-off contribution of non-patentable know-how or a defined service. The bylaws must organise the commitment — its nature, its duration, any exclusivity — and what happens to the shares when the contributor stops performing. Without that mechanism in the bylaws, the company is left with shares it cannot recover and a contributor who has not delivered.

The rest is bylaws-driven.

The rights attached to the shares — voting weight, dividend entitlement, share of the liquidation surplus — are set in the bylaws. The shares carry the right to take part in collective decisions and vote; on the economics, the statutory default is the share of the smallest contributor (C. civ. Art. 1844-1), so any different arrangement must be written.

The duration of the commitment — how long the contributor must perform — is set in the bylaws. A typical structure ties the shares to a multi-year service commitment, after which the shares are fully earned. The inalienability rule still applies after the commitment is fully served, but the cancellation risk falls away.

The cancellation mechanism on failure to perform is set in the bylaws. The drafting should describe what counts as a failure (sustained absence, gross misconduct, material breach of the service commitment, loss of a regulated authorisation tied to the contributor's role), the procedure to be followed (notification, hearing, decision body), and the timing of the cancellation.

The post-termination treatment is also set in the bylaws. If the contributor leaves before the commitment ends, do the shares get cancelled outright? Are they bought back at a discount? Do they get reduced pro-rata to the time served? Each option has a different effect on the founder-contributor relationship.

How to draft equity for work in French SAS bylaws

The clause should cover, in order:

The contributor and the contribution. Each contributor is named. The services they undertake to perform are described — not in vague terms ("technical know-how"), but in operational terms ("design and lead the development of the company's core software platform"; "serve as scientific advisor and chair of the scientific committee"; "introduce the company to the named client portfolio"). The drafting should be precise enough that a third party reading the bylaws can tell whether the contributor is performing.

The shares issued. The number of shares issued against the apports en industrie, the rights attached (voting, dividends, share of liquidation surplus), and any par-value reference. The bylaws should be express on each right — silence hands the economics to the smallest-contributor default.

The duration. The period over which the contributor must perform. Common structures: an indefinite commitment with an exit mechanism on departure; a fixed multi-year period after which the shares are fully earned; a vesting-like schedule with periodic milestones.

The performance test. What counts as performing. For some contributors the test is presence (working full-time on the company's business); for others it is delivery (specific outputs, named milestones); for others it is a mix.

The cancellation procedure. The notification step, the hearing right, the decision body, the cancellation effective date, and the consequences for the cap table. The clause should respect the contributor's rights of defence — notification and the opportunity to be heard before the decision — and it cannot strip the contributor of his vote on the decision concerning him: clauses doing so have been struck down in the neighbouring exclusion context.

The leaver mechanics. What happens to the shares if the contributor leaves before the duration ends. Bad-leaver triggers (gross misconduct, sustained underperformance, breach of confidentiality) typically lead to cancellation or an exit at a discount; good-leaver triggers (invalidity, agreed mutual exit) typically lead to reimbursement at full value — and on death the shares lapse automatically, personal and non-transmissible as they are, so the bylaws should provide any indemnity payable to the estate. The leaver split should be calibrated to the company's specific risks.

The interaction with the rest of the bylaws. Whether apports en industrie shares count toward the quorum and majority on collective decisions, whether they participate in capital increases, whether they convert into ordinary shares at any point. Each of these should be express in the bylaws, not assumed.

A poorly drafted apports en industrie clause is rarely workable. The contributor who delivers exactly what they undertook ends up arguing about cap-table mechanics; the contributor who fails to deliver remains on the cap table because the cancellation procedure was never set out. Founders should treat the clause as a foundational cap-table instrument, not as boilerplate.

What happens if the equity-for-work contributor doesn't perform

The bylaws govern the consequences. Without a cancellation mechanism in the bylaws, the company has no remedy beyond the general contract claims any party would have — damages, specific performance — which give the company nothing on the cap table. The shares stay where they are.

A workable clause provides for cancellation in defined circumstances:

• Sustained absence or non-performance. The contributor stops performing the services without a justifying reason; after a defined notice and a defined hearing window, the company's competent body (the shareholders, the board, a committee) decides on cancellation.
• Gross misconduct or material breach. The contributor's actions are a serious breach of the service commitment or of related undertakings (confidentiality, non-compete). The cancellation proceeds on a faster track but still respects the right to be heard.
• Loss of a qualifying status. The contributor was contributing in a specific qualifying capacity (a regulated profession, a directorship at a related company, a relationship with a named client). If the contributor loses that status, the contribution falls away.

In each case, the cancellation effect is the disappearance of the apports en industrie shares from the cap table. The contributor loses voting rights, dividend rights, and any participation in a future exit. The other shareholders' percentages adjust pro-rata.

The bylaws can also provide for a partial cancellation — a reduction in the number of shares proportional to the time not served — instead of a full cancellation. This softer mechanism rewards the contributor for partial delivery and is sometimes negotiated by senior expert contributors who want a measure of protection against capricious decisions.

The cancellation decision is taken by the body the bylaws designate — typically the shareholders, or a board where one exists. The procedure must respect the contributor's right to be heard before the vote, and — as with exclusion clauses — a shareholder cannot be stripped of his vote on the decision that concerns him; the bylaws should set out the notification, hearing, and decision steps to avoid procedural challenges.

Equity for work in a French SAS vs SARL vs SA: what each form allows

The three French commercial forms treat apports en industrie differently.

The SAS is the most flexible. Art. L 227-1 al. 4 of the Commercial Code lets the bylaws design the entire regime — the contributor, the contribution, the rights attached to the shares, the duration, the cancellation, the leaver mechanics. The mandatory rules (inalienability, no capital count, performance commitment) apply, and everything else is contractual.

The SARL also permits apports en industrie, with the modalities — the period, the rights, the cancellation — set in the bylaws.

The SA does not permit apports en industrie. Cash and in-kind contributions only. A company structured as an SA cannot issue equity against a service commitment — and for founders considering a transformation from SAS to SA, for an IPO for instance, any outstanding apports en industrie shares are a structuring point to resolve before the transformation.

For foreign founders choosing a form at incorporation, the difference matters. A SaaS, a deep-tech company, a creative agency, or any business where a key co-founder contributes expertise rather than capital fits the SAS. The SARL works with the same building blocks; the SA does not work at all.

Frequently asked questions about equity for work 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 drafting of an apports en industrie clause depends on the specific contributor, the company's planned activity, and the cap-table dynamics with cash and in-kind shareholders. Always seek qualified legal advice before structuring an equity-for-work arrangement in a French company.