Founder Lock-Up Clauses in a French SAS: Tying Shareholders in for Up to Ten Years

Founder lock-ups in a French SAS: the inalienability clause

A lock-up clause (clause d'inaliénabilité) in the bylaws of a French SAS prohibits transferring the covered shares for a defined period — up to ten years (C. com. Art. L 227-13). It welds the shareholder base together: founders stay economically tied to the company, investors know the people they backed cannot exit the table behind them, and a transfer made in breach is simply void (Art. L 227-15). It is also the most rigid of the SAS's transfer controls — introduced, modified and removed only by unanimous decision — which makes the drafting choices at incorporation matter for a decade.

This guide covers what the clause does and what operations it reaches, the ten-year public-order ceiling, the design freedom on who and what is covered, the escape valves careful drafting builds in, the investor-round practice with vesting and leaver mechanics, the nullity sanction and its third-party effects, and the unanimity rules on any change. For the neighbouring clauses, see our guides to approval clauses and to the pacte-versus-bylaws allocation.

What the lock-up does — and which operations it reaches

During the lock-up, the covered shares cannot be transferred: « inalienability » reaches cessions and transmissions generally — sale, contribution, exchange, gift, and transfers of dismembered rights (bare ownership or usufruct). The holder keeps everything else: the shares stay in their name, votes and dividends attached. What the clause does not reach — and should not be drafted to reach — are universal transmissions such as mergers and demergers: extending the inalienability to those would paralyse any restructuring of the company.

The purposes are structural. A stable core: the law allows the clause without any required justification, precisely to weld a durable shareholder nucleus while leaving room to admit new shareholders. Founder alignment: equity that cannot be sold keeps the founder's economics tied to the company's growth. Investor confidence: a lead investor entering a round wants the founders locked past the disruptive-departure window. Event stability: a frozen table through a sale process, a transformation or a pending authorisation.

Two distinctions keep the analysis clean. The lock-up is not vesting — vesting decides which shares the founder has earned; the lock-up decides whether earned shares can be sold; investor structures run both. And the contractual lock-up is unnecessary for industry shares: shares issued against an apport en industrie are inalienable by law for as long as the regime provides — the bylaws clause matters for the founder's ordinary shares.

The ten-year ceiling — public order, with one renewal route

The ten-year maximum is d'ordre public: it cannot be extended, and the clause cannot renew tacitly. The consequences for drafting:

• The starting point is a bylaws choice — publication of the bylaws, the adoption of the clause, or another anchor the drafters fix; the drafting should say it expressly;
• The clause can cover future shares — beyond the shares held at signature, all those the covered shareholders will be allotted, acquire or subscribe during the prohibition period, a design the treatise permits expressly and one precious across funding rounds;
• No stretching — an amendment extending a five-year clause within the ten-year envelope is a modification (unanimous); any drafting reaching beyond ten years fails to that extent;
• Renewal after expiry — once the ten years have run, the shareholders can unanimously introduce a fresh ten-year clause; every shareholder then on the table holds a veto;
• Event-based ends within the ceiling — the clause can terminate early on defined events (sale of the company, IPO, a milestone), running until the event or the ceiling, whichever comes first; graduated designs (full lock-up, then approval-conditioned transferability, then freedom) are equally valid inside the envelope.

In practice the ceiling rarely binds operating companies — exits arrive first. It matters for long-life vehicles: family holdings and patient-capital structures plan the renewal calendar from the start, knowing each renewal is a unanimous event.

Who and what the clause covers: the design freedom

The bylaws arrange the inalienability freely across several dials (the treatise's own checklist): the duration and its starting point; the shares or shareholders covered — the clause can be general, or touch only a fraction of the shares, only certain shareholders, or only preference-share categories; the extension to future acquisitions during the period; even the prohibited transferees — a clause can forbid transfers to a competitor, an undesirable entity, or another shareholder where the founders want the original balance preserved; the recording of the clause in the movements register and shareholder accounts; the rights of new subscribers and transferees against the remaining duration; and the clause's fate on a shareholder's removal or exclusion.

The standard configurations follow from the dials: founders-only lock-ups (the investor-round classic — the backers stay free while the founders are tied), class-based lock-ups where preference architecture exists, all-shareholder lock-ups for JVs and family cores, and symmetrical designs where a lead investor accepts a shorter lock on its own shares as a commitment signal. Whatever the perimeter, one procedural constant applies: the clause is adopted at incorporation or, later, only by a unanimous decision of all the shareholders — not merely the covered ones — and every modification or removal is equally unanimous (C. com. Art. L 227-19). The practical sequel: draft the clause fully at incorporation, covering future shares and future rounds, rather than counting on later amendments each shareholder can veto.

Which lock-up design fits your table?

Pick your situation and see the design that usually fits — and the valve not to forget.

The escape valves: carve-outs a workable lock-up needs

The treatise's warning is blunt: imprisoning even a fully informed shareholder in their shares for ten years can be an illusion — the welding objective can turn into paralysis. Workable clauses build the valves in:

• Family and estate planning — transfers to a spouse, ascendants or descendants, and the treatment of inheritance (exempt, or passing the shares to heirs with the remaining lock attached — the drafting must choose);
• Intra-group movements — a corporate holder's transfers to controlled affiliates, so internal reorganisations do not breach the clause;
• Grave situations — invalidity, court-ordered transfers, and the exclusion mechanism the treatise itself points to as the escape route for a blocked opponent, with its organised buy-back and valuation;
• Leaver coordination — an express carve-out for the forced transfers the leaver clause organises, without which the two mechanisms collide;
• Company-side moves — buy-backs by the company and transfers between shareholders subject to the same lock, where the founders want internal fluidity;
• Approval-conditioned exits — a valve opening on the consent of a designated organ, keeping control instance by instance.

Calibration is the craft: too few valves and the clause produces the conflicts it was meant to prevent; too many and the protection is porous. And one restructuring caution — because the clause does not reach universal transmissions, and because mergers can require unanimous decisions where such clauses exist, the drafting should address the merger case deliberately rather than by silence.

Investor rounds: lock-up, vesting and leaver as one system

Most operating-company lock-ups arrive with a term sheet. The standard architecture: a two-to-four-year founders' lock in the bylaws (the investor's protection window), vesting in the pacte (typically four years, one-year cliff — deciding which shares the founder has earned, with unvested shares repurchasable on departure), and a leaver clause (good-leaver full value, bad-leaver discount) whose forced transfers the lock-up expressly carves out. Each mechanism answers its own question — earned? saleable? what happens on departure? — and the drafting keeps them from colliding: the bylaws carry the lock and the leaver's structural route; the pacte carries the schedules, triggers, discounts and payment terms.

The unanimity rule shapes the closing mechanics. Introducing or adjusting the lock at a round requires every existing shareholder's consent — obtained, in practice, through the coordinated round documentation: the founders consent expressly, the incoming investor adheres to the amended bylaws by subscribing. Later rounds reset within the ceiling on the same coordinated basis. Sequencing choices follow taste: locks that expire with full vesting (earned means saleable), or locks surviving vesting for a tail year of investor protection. And at exit, the clause is lifted or terminates: an event-based termination clause spares the unanimity round at closing, which is why well-drafted locks die automatically on a sale or IPO.

The sanction and the third-party mechanics

Any cession made in violation of a statutory inalienability clause is null (C. com. Art. L 227-15): the buyer never becomes a shareholder, the register stays unchanged, and the company refuses the movement — the court confirming where the buyer disputes it. The disappointed buyer's remedies run against the seller on the failed transaction; the seller keeps the shares and the lock keeps running. A pacte-only lock-up, by contrast, leaves the breaching transfer standing and converts the protection into damages — unless a statutory bridge clause referring to the pacte restriction imports the nullity (Cass. com. 27 June 2018, n° 16-14097, a transfer during a ten-year pacte promise annulled on that basis).

The third-party mechanics support the sanction. The clause is opposable to third parties from the publication of the bylaws — but because a lock-up is often partial (a fraction of shares, a category, certain holders), practice adds two layers: the clause is recorded in the movements register and the shareholder accounts, and a prudent transferee asks the company for an attestation that the shares are freely negotiable or, on the contrary, temporarily locked. A buyer who skipped both steps will find little sympathy for an apparent-freedom argument built on documents they never checked.

Map your lock-up: when does it actually end?

Enter the clause's starting point and duration — the planner maps the end date, the time remaining, and the ceiling check.

Modifying, removing, renewing: unanimity all the way

The inalienability clause is the most consent-protected of the SAS's transfer controls: its introduction in the course of the company's life, its modification and its removal all require a unanimous decision of the shareholders (C. com. Art. L 227-19) — and unanimity means every shareholder of the company, not merely those attending a meeting. There is no tightening/loosening asymmetry: shortening the period or widening the carve-outs is as unanimous as extending or narrowing.

The mechanics that follow: the change is a collective decision in the bylaws' forms, the bylaws are restated, the registry updated. Practical routes exist for the moments that matter — at an exit, an early lift is voted unanimously in the closing choreography (or avoided altogether by an event-based termination clause drafted at the start); at expiry, a fresh ten-year clause is a new unanimous adoption, giving every then-current shareholder a veto over the renewal. What does not work is the shortcut: applying, extending or reshaping a lock by ordinary majority, or through a « shell » clause meant to bypass the unanimity — the consent architecture is the point of the regime, and it is what makes a lock-up, once properly adopted, so reliable for the decade it covers.

Frequently asked questions about founder lock-ups 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 lock-up design depends on the cap table, the investors' requirements, and the company's trajectory. Always seek qualified legal advice before drafting, amending or breaching-testing an inalienability clause in a French company.