The French SAS: A Complete Guide

The French SAS: structure, governance, tax and strategic uses

Since its creation in 1994, the Société par Actions Simplifiée (SAS) has become the dominant French corporate form. In 2025, it accounted for almost 70 % of all new French company formations, up from under 40 % as recently as 2014 (INSEE, Créations de sociétés selon la forme juridique, 14 April 2026). It is now the default choice for founders, investors, holding companies, family groups, and multinational subsidiaries. For any international party considering a French operation — whether establishing a subsidiary, acquiring a French company, joining a joint venture, or structuring a cross-border holding — a working understanding of the SAS is essential.

The SAS is an autonomous form of company. It is not a subcategory of the société anonyme (SA), though it borrows some of the SA's rules by reference. Its distinctive feature is the scope it gives to its founders to design their own internal rules. A large proportion of the SAS's governance, decision-making, share transfer controls, and management structure is defined in the articles of association rather than by statute. This produces both opportunity and risk: the freedom to tailor the company to precisely the needs of its shareholders, and the corresponding burden of drafting articles that address every situation the company may encounter.

This guide explains the SAS in its current state under French law, with all recent reforms integrated. It covers the form's legal framework, its governance freedom, the mandatory rules that cannot be overridden, its tax regime, its strategic uses, and its main differences with the société anonyme (SA) and the société à responsabilité limitée (SARL).

The French SAS: the form that has overtaken all others

The SAS was created by Law No. 94-1 of 3 January 1994. For its first fifteen years it was used primarily by sophisticated parties — joint venture partners, holding companies, large groups structuring their French subsidiaries. Individual entrepreneurs continued to prefer the familiar SARL while the SAS carried a €37,000 minimum capital; after that requirement was removed on 1 January 2009, the balance shifted progressively and then decisively. In 2013, SARLs represented 63 % of new company formations and SAS represented only 29 %. By 2025, SARLs had fallen to 24 % and SAS had risen to almost 70 %.

Source: INSEE, Créations de sociétés selon la forme juridique (published 14 April 2026).

The reasons for this shift are not mysterious. The SAS can have a single shareholder, who may be an individual or a legal entity. It has no minimum capital requirement. Its governance is set by its articles, which means the shareholders can choose their own decision-making rules. Its president can be a legal entity. Its articles can prohibit share transfers, require the company's approval for any transfer, or force a shareholder out in defined circumstances. None of these features is available, in the same form or with the same flexibility, in any other French company.

The French SAS's legislative trajectory since 1994

Several successive reforms have made the SAS progressively more accessible.

Law No. 99-587 of 12 July 1999 introduced the single-shareholder SAS (the SASU), modelled on the single-shareholder EURL. Before 1999 an SAS required at least two shareholders.

Law No. 2008-776 of 4 August 2008 (the modernisation of the economy law) removed the minimum capital requirement of €37,000, which had until then applied to the SAS as it did to the SA. Since 1 January 2009, an SAS can be constituted with any capital, including €1.

Ordinance No. 2017-747 of 4 May 2017, enacted under Law No. 2016-1691 of 9 December 2016 (the Sapin II law), ended the statutory requirement of unanimous shareholder agreement for the adoption or modification of approval clauses (clauses d'agrément). Since this reform, approval clauses can be adopted and modified under whatever conditions the articles themselves specify.

Law No. 2019-744 of 19 July 2019 aligned exclusion clauses (clauses d'exclusion) with the new regime for approval clauses. Exclusion clauses can therefore also be adopted and modified under the conditions that the articles specify, without statutory unanimity. The same law abolished the requirement to appoint a contribution auditor (commissaire aux apports) for contributions in industry, and the requirement to appoint a special advantages auditor (commissaire aux avantages particuliers) on the constitution of an SAS.

Law No. 2019-486 of 22 May 2019 (the PACTE law) reformed the rules on the appointment of statutory auditors, uniformly for all commercial companies. Since the first financial year ending after 26 May 2019, the rules for the mandatory appointment of an auditor in an SAS are the same as those for an SA. An SAS forming part of a group within the meaning of Article L. 233-16 of the Commercial Code is no longer required to appoint an auditor for that reason alone. The audit thresholds were also raised.

Ordinance No. 2025-229 of 12 March 2025 reformed the nullity regime in French company law. Under the new Article L. 227-20-1 of the Commercial Code, in force since 1 October 2025, the articles of an SAS may expressly provide that decisions taken in breach of the articles' governance rules are null and void. This reform addressed a gap in the previous framework: most internal breaches of articles could not automatically produce nullity of the resulting decision.

Freedom of drafting: the French SAS's defining feature

The structure and operation of the SAS are governed by its articles of association. Article L. 227-5 of the Commercial Code states this in so many words: the articles determine the conditions under which the company is managed.

A single mandatory rule affects the representation of the company externally. The president is the only organ that can legally represent the SAS in dealings with third parties. This is a protection for third parties dealing with the company, not a limitation on internal governance. All other internal matters are defined by the articles: the composition, operation, and powers of management organs; the conditions under which collective decisions are taken; the majorities required; the procedures for convening and consulting shareholders; the conditions for the appointment, compensation, and removal of the president.

The shareholders can therefore design an organisation that fits their precise commercial needs. Small companies may start with a single president and add additional management organs (general managers, executive committees, advisory boards) as they grow. Partners in a joint venture may allocate governance responsibilities through specific voting thresholds, veto rights, and appointment mechanisms. Family groups may create hierarchies of decision-making that reserve strategic matters for certain family members and delegate operational matters to others. Holding companies may allocate powers between the parent and the management of its operational subsidiaries with a precision unavailable in any other French company form.

The same freedom applies to the shareholder relationship. The SAS permits inalienability clauses prohibiting the transfer of shares for up to ten years (Art. L. 227-13). It permits pre-emption rights giving existing shareholders priority to acquire shares offered for transfer. It permits approval clauses requiring the company's consent to any transfer (Art. L. 227-14). It permits exclusion clauses allowing the company to force a shareholder out in defined circumstances (Art. L. 227-16). Any transfer made in breach of the articles is null and void by operation of law (Art. L. 227-15).

Mandatory rules that cannot be overridden

Despite its flexibility, the SAS is subject to a short list of mandatory rules that the articles cannot override. These rules derive from general principles of French company and contract law. They include:

• The right of every shareholder to participate in collective decisions, and the absolute character of the right to vote. A shareholder cannot be deprived of the right to vote on a matter submitted to collective decision. This rule derives from Article 1844 of the Civil Code.
• The right of defence in case of exclusion. A shareholder who is the object of an exclusion procedure must be given notice of the grounds for exclusion, an opportunity to be heard, and a chance to respond before the decision is taken. This right cannot be contracted away; exclusions decided in disregard of it are open to challenge.
• The prohibition on increasing a shareholder's obligations without consent. A modification of the articles that increases a shareholder's financial or other obligations requires that shareholder's individual consent.
• The nullity of léonine clauses. A clause that deprives a shareholder entirely of profits, or that exempts a shareholder entirely from losses, is null under Article 1844-1 of the Civil Code. The analysis extends to clauses that produce this effect indirectly, for example distribution mechanics that leave one class of shares with nothing in every possible scenario.
• The nullity of purely potestative conditions. A condition whose realisation depends exclusively on the will of one of the contracting parties is null as a matter of French contract law.
• The prohibition on pacts on future succession. Articles cannot set out, in advance, the distribution of shares upon the death of a shareholder in a way that amounts to a private succession agreement between family members.
• The rule on the dissolution of a single-shareholder SAS where the sole shareholder is a legal entity: dissolution takes effect as a universal transfer of assets to the shareholder without liquidation, under Article 1844-5 of the Civil Code.

The legal framework of the French SAS

The SAS is subject to three overlapping layers of rules.

The first layer is the general law of commercial companies: Articles L. 210-1 to L. 210-12 (and R. 210-1 to D. 210-21) of the Commercial Code. These rules apply to all French commercial companies.

The second layer is the general law of companies in the Civil Code: Articles 1832 to 1844-17. These articles cover the essential requirements of any French company: the existence of a common purpose, the obligation to share in profits and losses, the rules on dissolution.

The third layer is the body of rules specific to the SAS: Articles L. 227-1 to L. 227-20 of the Commercial Code, together with the new Article L. 227-20-1 on nullity (in force since 1 October 2025). There are around twenty articles, plus a small number of regulatory provisions (Arts. R. 227-1-1, D. 227-1, R. 227-2, D. 227-3).

Because the SAS-specific rules are deliberately brief, the Commercial Code provides that the rules applicable to the SA apply to the SAS where they are compatible with its specific provisions. This cross-reference means that a large body of SA rules governs the SAS by default, subject to displacement by the articles.

The following SA rules do not apply to the SAS:

• Rules on the administration and direction of the SA, including the board of directors, the executive board (directoire) and supervisory board (conseil de surveillance), the overall governance architecture, the limits on the accumulation of mandates, and age limits (Arts. L. 225-17 to L. 225-95-1 of the Commercial Code).
• Rules on shareholder assemblies (Arts. L. 225-96 to L. 225-102 and L. 225-103 to L. 225-125).
• The minimum capital requirement of €37,000 (Art. L. 224-2).
• The requirement to appoint a special advantages auditor at constitution (Art. L. 225-14, paragraph 2).
• The two-year existence requirement for transformation into another form (Art. L. 225-243).
• Among the rules common to commercial companies, the obligation to inform shareholders of the total number of voting rights within 15 days of the ordinary general assembly (Art. L. 233-8, I), and the filing with the registry of a declaration of conformity in case of merger (Art. L. 236-6, paragraph 17).

The following SA rules apply to the SAS, subject to the SAS's specific provisions and subject to adaptations that the articles may provide:

• Constitution of the company without public offering (Arts. L. 225-12 to L. 225-16-1 and R. 225-13 to R. 225-14-1), and the criminal offences attached (Arts. L. 242-1 to L. 242-5, applied by reference through Art. L. 244-1).
• Since 1 January 2025, the obligation to establish a vigilance plan for the largest SAS, under Article L. 225-102-1 of the Commercial Code.
• Modifications of share capital and employee shareholding (Arts. L. 225-127 to L. 225-217 and R. 225-113 to R. 225-160-4), and related criminal offences (Arts. L. 242-17 to L. 242-24, applied by reference through Art. L. 244-1).
• Control of the company (Arts. L. 225-218 to L. 225-232 and R. 225-161 to D. 225-164-1).
• Transformation of the company (Arts. L. 225-244, L. 225-245 and R. 225-165).
• Dissolution (Arts. L. 225-246 to L. 225-248, R. 225-166 and R. 225-166-1).

Where these SA rules refer to the decisions or powers of the SA's board of directors or its president, the Commercial Code provides that the corresponding decisions are taken in the SAS by the president or by the managers designated by the articles for this purpose.

The prohibition on public share offerings

Unlike the SA, the SAS cannot make public offerings of its shares and cannot be admitted to trading on a regulated market (Art. L. 227-2). This is an absolute prohibition. An SAS that wishes to list its shares must first transform into an SA.

There are three exceptions to the prohibition. An SAS may carry out offerings addressed to qualified investors, within the meaning of Articles L. 411-2 and L. 411-2-1 of the Monetary and Financial Code. It may carry out offerings to a restricted circle of investors, a private placement limited by law to fewer than 150 investors. It may also have recourse to participatory financing (crowdfunding), which is one of the statutory exceptions to the prohibition on public offerings.

The PACTE law of 2019 added a further exception. An SAS may address an offer for the acquisition of its securities to its directors or employees (or former employees), or to those of entities that are connected to it. This has been possible since 23 October 2019, under the conditions of European Regulation 2017/1129 of 14 June 2017 on the prospectus to be published in case of public offering of securities (Ordinance No. 2019-1067 of 21 October 2019).

Creation and transformation: the unanimity requirement

The SAS is constituted by the unanimous agreement of its founders. All founders must sign and approve the articles, and the articles as drafted are binding on any subsequent shareholder entering the company.

Where the SAS is created by transformation of an existing company (for example, a SARL that converts into an SAS), the decision to transform must be taken unanimously by the shareholders, regardless of the form of the company being transformed (Art. L. 227-3). The same unanimity applies where the SAS is created by merger.

This unanimity requirement is one of the few rigidities of the SAS framework. It reflects the choice that the law makes about the SAS: the form is available to those who agree on its terms, not available as a default into which a shareholder can be dragged against their will.

Is the French SAS the right form for your project?

Pick the situation closest to yours and see how the SAS fits it — and the drafting point to settle first.

Strategic uses of the French SAS

The SAS is used across the French economy, from two-person startups to subsidiaries of multinational groups. Four use cases dominate.

Joint ventures and cooperation structures

The SAS was originally conceived as a tool for cooperation between sophisticated parties. Its flexibility makes it particularly well-suited to joint ventures, where two or more parties with different backgrounds, cultures, and commercial objectives need a governance framework that reflects their specific agreement.

Several SAS features support this use. The articles can provide that a change of control of one partner triggers the suspension of that partner's voting rights, or triggers an exclusion procedure. The articles can prohibit transfer of shares for up to ten years (Art. L. 227-13), a powerful mechanism for locking in the commitment of the founding partners during a critical development phase. The articles can establish a rotating presidency, under which each partner holds the presidency for defined periods. The articles can reserve specified strategic decisions for unanimous consent of all partners, while permitting operational decisions by simple majority. Each of these features would be impossible, or significantly more difficult to achieve, in an SA or SARL.

Small and medium-sized enterprises

The SAS is now the default form for French SMEs, for a combination of legal and commercial reasons.

The legal reasons include the freedom to design the management structure, the freedom to set the majorities for collective decisions, and the ability to use preference shares to give different rights to different categories of shareholders. The commercial reasons include the modern image the SAS presents to external partners, investors, banks, and employees; the ease with which two-person partnerships can establish a rotating presidency or allocate responsibilities between themselves; the suitability of the form to accommodate outside investment through preference shares, convertible securities, stock options, and employee share plans; and the president's social security regime (the general salaried employee regime), which is usually preferable to the self-employed regime that applies to the gérant of a SARL.

The features that make the SAS particularly suited to SMEs include:

• Complete freedom in the design of the management organs, with no statutory conseil d'administration or directoire imposed.
• The ability to dissociate voting power from capital ownership, for example through preference shares with multiple voting rights or shares without voting rights.
• The ability to use preference shares to grant different classes of shareholders different economic and governance rights.
• The possibility of statutory restrictions on share transfers and control of the shareholding base.
• A president status that approximates to a salaried employee for tax and social security purposes.
• The possibility of an investor-friendly governance structure, including specific veto rights for outside investors.
• Limited liability for all shareholders, capped at their contributions.
• The possibility of incorporating as a single-shareholder SASU, with the sole shareholder being another SAS.

Holding and group structures

The SAS is commonly used as the legal vehicle for holding companies and for French subsidiaries of larger groups. Its features suit this role in several ways.

The SAS can have a legal entity as its president. A French subsidiary can therefore have its parent company as president, with the parent's own management exercising the functions of the SAS's president through its own legal representatives. This provides a direct line of control between the parent and the French subsidiary, without requiring the appointment of a specific individual to the presidency.

The articles can specify decision-making procedures that are adapted to group governance. Certain strategic decisions — major investments, acquisitions and disposals, entry into significant contracts, granting of guarantees — can be reserved for the parent company's prior written consent. Day-to-day operational decisions can be delegated to the local president. This matrix of decisions and approvals, familiar to any multinational group, is straightforward to implement in an SAS.

The SAS also avoids the procedural formalism that would apply to a SA subsidiary. Collective decisions can be taken by written resolution, by unanimous consent expressed in a document, or by electronic means, without the need for physical meetings. Management can operate without a conseil d'administration or directoire. This reduces the administrative burden of compliance, without compromising the parent's control.

The SAS is also the standard vehicle for 100 % owned subsidiaries. Where the parent is itself a legal entity, dissolution of the SAS takes effect as a universal transfer of assets to the parent without liquidation (Civil Code art. 1844-5), which simplifies group restructuring.

Business succession and family planning

The SAS has become one of the main legal tools for business succession in France. The features that support this use are the same features that support its use in joint ventures and SMEs: the freedom to allocate governance rights independently of capital ownership, the ability to restrict transfers, and the ability to design exit mechanisms. Applied to a family context, these features allow a founder to transmit the economic value of the business while retaining operational control.

A typical arrangement might transfer a large share of the capital to the next generation, while reserving majority voting rights for the founder through double or multiple voting rights on specific classes of shares. A family pact, once drafted as a separate agreement between family members, can be incorporated into the articles, which makes it binding on all shareholders and gives it the protection of Article L. 227-15 (nullity of any transfer made in breach of the articles). Veto rights can be reserved for specified family members or classes of shares. Conditions for the entry of new shareholders — for example, spouses of family members or unrelated third parties — can be set with any appropriate level of strictness.

The cost of this approach is that its rules are binding on all shareholders and are not confidential: the articles are filed at the Trade and Companies Register. Where confidentiality is essential, a family pact may still be used as a separate agreement alongside the articles, though with reduced enforceability.

The tax regime of the French SAS

Corporate tax as of right

The SAS is subject to corporate tax (impôt sur les sociétés, IS) as of right, regardless of the nature of its activity (CGI art. 206). Corporate tax applies to all the company's profits, whatever their destination — whether retained in reserves, carried forward, or distributed as dividends. The company's shareholders are separately taxable on any dividends they receive: individual shareholders pay income tax, and corporate shareholders pay corporate tax on the dividend income.

For financial years opened since 1 January 2022, the standard corporate tax rate is 25 %. A reduced rate of 15 % applies to the portion of profit not exceeding €42,500 (the threshold was €38,120 before financial years ending on 31 December 2022), for companies meeting the conditions of Article 219 of the General Tax Code: turnover not exceeding €10 million, and capital fully paid up and held, continuously and for at least 75 %, directly or indirectly, by individuals.

Beyond the standard rate, the SAS may benefit from reduced rates on specific types of income:

• 0 % on long-term capital gains on qualifying participation interests (excluding shares in property-holding companies), subject to a 12 % add-back for fees and charges.
• 15 % on long-term capital gains on qualifying FCPR (venture capital fund) units or SCR (venture capital company) shares held for at least five years.
• 19 % on long-term capital gains on listed property-holding companies.
• 25 % on the first disposal of shares in companies holding a licence granted by the French audiovisual regulator.
• 19 % under the temporary regime for disposals of office, commercial, or industrial premises, or building land, for disposals made until 31 December 2026.
• 10 % on income from qualifying industrial property, on election.

A social contribution of 3.3 % applies to SAS companies with turnover of at least €7,630,000 and corporate tax (at standard or reduced rates of 10 %, 15 %, 19 % or 25 %) exceeding €763,000 (CGI art. 235 ter ZC).

The partnership regime option

For a limited period, newly-formed SAS companies may elect to be taxed under the partnership regime (régime des sociétés de personnes) rather than corporate tax. This option applies for five financial years (CGI art. 239 bis AB).

The option is available to SAS companies meeting the following cumulative conditions:

• Less than five years old at the opening of the first financial year covered by the option.
• Principally engaged in an industrial, commercial, craft, agricultural, or professional activity, excluding the management of the company's own movable or immovable assets.
• Capital and voting rights held at least 50 % by individuals, and at least 34 % by individuals who are the president or a general manager of the company (or members of their tax household).
• Fewer than 50 employees, and annual turnover or total balance sheet below €10 million.

The activity, shareholding, turnover, and balance sheet conditions must be continuously met throughout the period of the option. The employee threshold is assessed under the rules of Article L. 130-1 of the Social Security Code, which counts a crossing of the threshold only where it persists for five consecutive years, so that in practice crossing the 50-employee threshold during the five-year option period will rarely end the regime.

For the 50 % and 34 % thresholds, certain indirect participations (SCR, FCPR, specialised professional funds, professional private equity funds, free partnership companies (SLP), SDR, SFI, SUIR, or equivalent structures in another EU state or a treaty state) are disregarded, provided there is no relationship of dependence between the SAS and the fund. The 34 % individual threshold takes into account shares held directly by the manager and by members of the manager's tax household.

The option requires the unanimous agreement of all shareholders, except the specific investor structures mentioned above. It must be notified to the tax authorities in the first three months of the financial year for which it is to apply. It can be revoked within the five-year period, with notification in the first three months of the relevant financial year. If exercised from the company's constitution, it applies from the first financial year.

The practical benefits of the partnership regime are twofold. First, it allows the losses of the early years of operation to be imputed against the income of the shareholders (professional income, for individual shareholders with a professional activity). Second, where a shareholder exercises a professional activity in the company, interest on borrowings taken out to acquire the shares becomes deductible against the shareholder's share of the company's results, which is not the case for shares in an SAS subject to corporate tax.

The option has no effect on the limited liability of the shareholders: liability remains capped at the amount of each shareholder's contribution.

Exit from the partnership regime, whether during or at the end of the five-year period, is treated as a change of tax regime and triggers the corresponding tax consequences.

Partnership-regime eligibility check for your French SAS

Answer the five conditions and see whether your SAS can elect the five-year partnership regime — and which condition fails if not.

The French SAS and the SA: the simplified form and its rigid counterpart

The SA is the traditional French joint-stock company. It is the form used by listed companies and by some of the largest unlisted groups. Its framework is prescribed by statute in considerable detail. The differences between the SAS and the SA are fundamental, even though the SAS borrows some of its rules from the SA by reference.

Listing. Only the SA (and the little-used commandite par actions) can have its shares admitted to a regulated market. The SAS cannot. A company that expects to list must adopt the SA form or, where already in SAS form, transform before listing.

Minimum capital. The SA must have a minimum capital of €37,000 (Art. L. 224-2). The SAS has no minimum, and can be constituted with capital of €1, though this is not advisable for any company intending to operate meaningfully.

Management structure. The SA has a mandatory governance architecture. It can be organised as a conseil d'administration (board of directors) headed by a président who may also assume the role of directeur général (general manager), in which case the functions are combined in a président-directeur général (PDG); or it can be organised as a directoire (executive board) supervised by a conseil de surveillance (supervisory board). The SAS, in contrast, is required only to have a president. The articles may, but need not, provide for a directeur général, directeurs généraux délégués, or additional management organs.

Identity of the president. The SAS's president can be an individual or a legal entity. The SA's president and directeur général must be individuals.

Accumulation of mandates. The SA limits directors to five board mandates (not counting mandates in controlled companies) and directeurs généraux to three. The SAS imposes no such limits, and the SAS's mandates are not counted against the SA's limits.

Revocation of managers. The SA's PDG can be revoked at any time by the board without cause and without notice, under the ad nutum regime. A directeur général who is not the president can be revoked at any time, but is entitled to damages if no just cause exists. The SAS leaves this entirely to the articles: revocation can be without cause and without compensation, or for just cause only, with or without notice and compensation, as the articles specify.

Accounts and reporting. Since the first financial year ending after 26 May 2019 under the PACTE law, the rules on the mandatory appointment of a statutory auditor are the same for SAS and SA. Since 1 January 2025, the SAS's management report must contain the same information as the SA's management report; the previous lighter regime for the SAS has been removed. The SAS, however, remains exempt from the obligation to produce a governance report.

Related-party agreements. The SAS's regime for related-party agreements under Article L. 227-10 differs in several respects from the SA's equivalent regime. In the SAS, agreements are not subject to prior authorisation. They are approved by the shareholders on the basis of a report from the statutory auditor or, in its absence, from the president. Failure of approval does not render the agreement void, but the person concerned is liable for any loss caused to the company. The SAS's regime covers only shareholders holding more than 10 % of voting rights; it does not extend to agreements in which a manager or such a shareholder is merely indirectly interested, and the interested shareholder is not expressly deprived of the right to vote on the approval.

Single shareholder. The SAS can be single-shareholder (SASU). The SA requires a minimum of two shareholders, or seven if listed.

The French SAS and the SARL: simplified joint-stock company and limited liability company

The SARL has historically been the form of choice for small French businesses. Its framework is prescribed in more detail than the SAS's but less than the SA's. The key differences are the following.

Management structure. The SARL must have at least one gérant, who must be an individual. The SAS's president may be a legal entity. A SARL cannot be directed by a legal entity.

Manager's social security status. The SARL gérant's status and social security regime depend on whether the gérant is a majority or minority shareholder: a majority gérant falls under the self-employed regime (régime des indépendants), while a minority or equal gérant who is paid falls under the general salaried employee regime. In the SAS, the paid president normally falls under the general salaried regime, whatever his shareholding.

Shareholding structure. The SARL is limited to 100 shareholders. The SAS has no upper limit, subject to specific statutory rules where an offering is addressed to a restricted circle of investors.

Voting rights. In the SARL, all parts sociales grant the same voting right: one part, one vote. The SAS can have preference shares with multiple voting rights, shares without voting rights, and combinations of economic and voting rights, subject only to the mandatory floor that every shareholder must have the right to participate in collective decisions.

Collective decisions. The SARL's rules on collective decisions are prescribed by statute, with specific majority requirements for different types of decisions (simple majority for ordinary decisions, reinforced majorities for changes to articles). Quorum rules apply for companies constituted after 4 August 2005. The SAS's rules are entirely in the articles: the articles can set any majorities, any quorum, any procedures, and can reserve specific rights of veto to specific shareholders.

Transfer of shares. The SARL has a statutory approval mechanism for transfers of parts to third parties, which is procedurally rigid and cannot easily be modified. The SAS can define its transfer control mechanism freely, subject only to the ceilings and floors established by law (for example the 10-year maximum on inalienability clauses under Article L. 227-13).

Related-party agreements. In the SARL, all agreements between the company and an associé (other than the sole associé) or the gérant are subject to approval. In the SAS, only agreements with shareholders holding more than 10 % of voting rights are subject to the approval regime.

Loans from the company. An individual gérant or individual associé of a SARL cannot borrow from the company or obtain a current account overdraft. In the SAS, loans regularly granted by the company to a non-executive shareholder, whether an individual or a legal entity, are permitted; loans to executive individuals remain prohibited.

Spouse protection. The Civil Code gives the spouse of a SARL associé (married under a community property regime) the right to claim the status of associé on constitution or transfer of parts; the spouse's consent is required for transfers. These rules (Articles 1832-2 and 1424 of the Civil Code) do not apply to the SAS, because SAS shares are negotiable securities rather than non-negotiable social rights.

Tax regime. Like the SAS, the SARL is subject to corporate tax as of right and can elect for the partnership regime for five years if it meets the conditions of Article 239 bis AB of the General Tax Code.

SAS, SARL and SA compared

The main features of the three forms are summarised below.

When to choose the French SAS

There is no single answer. The choice between SAS, SA, and SARL depends on the commercial objectives, the shareholder structure, the financing plans, and the medium-term strategy of the company.

The SAS is usually the appropriate choice where:

• The shareholders want flexibility in the design of governance, voting rights, share transfer controls, and exit mechanisms.
• The company expects to raise investment, and investors will require specific governance rights such as board seats, vetoes, drag-along and tag-along rights, or anti-dilution protection.
• The company is part of a group, and the parent wants direct control of the subsidiary through a legal-entity presidency.
• The shareholders want to separate economic rights from voting rights, for instance in family succession planning.
• The founders expect the company to grow quickly and want a corporate form that can accommodate later investment rounds, employee share plans, and preference shares without repeated restructuring.

The SAS is usually not the appropriate choice where:

• The company expects to be admitted to trading on a regulated market in the medium term, in which case the SA form is required.
• The business is simple, the shareholder base is expected to remain small and stable, and the protections offered by the SARL's statutory framework are preferred to the flexibility of the SAS.

For international founders and investors considering a French operation, the SAS is in most cases the form that will allow the transaction to be structured on terms that reflect the commercial agreement. Its flexibility is also its demand: the articles must be drafted with the same precision as a shareholder agreement in a jurisdiction without statutory defaults. French law gives the founders what they ask for, but only what they ask for, which is why the drafting of SAS articles, particularly in transactions with international counterparties, is a matter for experienced French counsel.

Frequently asked questions about the 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. French company law is fact-specific, and the choice of corporate form and the drafting of articles require professional advice calibrated to the specific circumstances of each company and its shareholders.