Variable Capital in a French SAS

Changing capital without rewriting the bylaws

A French SAS can be incorporated with variable capital. The bylaws fix two figures — a floor (capital plancher) and a ceiling (capital autorisé) — and capital movements within those bounds happen without the formalities that an ordinary capital change requires. New shareholders can be admitted and existing shareholders can be withdrawn through a simple cap-table update, with no décision collective, no registry filing, and no legal notice each time.

This guide covers what variable capital is, when it earns its keep, how the floor and ceiling work, what it changes for the pre-emptive subscription right and for the mandatory employee share-offer resolution, and where it fits against fixed capital and against the alternatives in the SARL and the SA.

What variable capital in a French SAS means

Variable capital is a special regime that lets a company's share capital change within a defined range without the procedural cost of an ordinary capital change. The legal basis is Arts. L 231-1 to L 231-8 of the Commercial Code: the bylaws of a company that is not an SA can stipulate that the capital may increase through successive payments by the shareholders or the admission of new shareholders, and decrease through the total or partial withdrawal of contributions made (C. com. Art. L 231-1). The rules specific to variable capital then apply on top of the ordinary SAS rules.

The bylaws fix two figures:

• the capital plancher — the floor below which the share capital cannot fall, even if shareholders withdraw;
• the capital autorisé — the ceiling above which any further increase requires an ordinary capital-increase decision.

Within those bounds, the company can issue new shares to incoming shareholders and redeem shares from departing shareholders without a décision collective of the shareholders, without a registry filing for the capital change, and without a legal notice in the département of the registered office. Each cap-table movement is recorded in the company's share register, and every document the company addresses to third parties must carry the words « à capital variable » next to the company name (C. com. Art. L 231-2) — the counterpart of the flexibility is that the outside world is on notice that the capital moves.

A fixed-capital SAS must run the full capital-change procedure for every increase or reduction: shareholder decision, registry filing, legal notice, notification to creditors where reduction is at stake. For companies that expect frequent cap-table movement, the saving from variable capital is real.

When variable capital in a French SAS makes sense

Variable capital fits a narrow set of structures, and outside those structures the regime adds little.

Frequent shareholder turnover. A club-deal vehicle, a family pool, a co-investment structure, or a holding company where shareholders join and exit on a rolling basis. Each entry or exit becomes a simple cap-table update rather than a capital-change procedure. Over a year of regular movement, the saving in legal cost and timeline is significant.

Capital scaling within a known range. A founder who knows the company will grow its capital from €10,000 to €200,000 over the first eighteen months — through a pre-seed and a seed round, for instance — can fix the floor at €10,000 and the ceiling at €200,000, then admit additional capital at any point within that range without procedure. The bylaws are written once for the full trajectory; only a movement above €200,000 will require an ordinary capital-increase decision.

Subsidiary structures inside a group. A French operating subsidiary funded incrementally by its foreign parent uses variable capital to receive new tranches of equity funding without each tranche triggering a French registry filing. The parent's treasury team can size each tranche to the subsidiary's actual cash needs without the procedural friction of a French capital-increase decision.

Cooperatives, collective vehicles, mutuals. The variable-capital regime was originally designed for entities of this kind, where membership and capital naturally fluctuate. A French SAS used as a cooperative-style vehicle can replicate the same flexibility without departing from the SAS form.

The regime does not fit a closely held operating company with a small, stable shareholder base and rare cap-table changes. For that kind of company, fixed capital is simpler — the bylaws name the capital figure, and a change happens occasionally enough that the ordinary procedure is not a burden.

Is variable capital the right regime for your French SAS?

Pick the situation closest to yours and see whether variable capital earns its keep — and the point to settle before drafting the bylaws.

How variable capital in a French SAS works in practice

The variable-capital regime is adopted at incorporation by including the relevant clauses in the bylaws. The bylaws must:

• declare expressly that the company has variable capital under Arts. L 231-1 et seq. of the Commercial Code;
• fix the capital plancher (the floor) and the capital autorisé (the ceiling);
• describe the conditions under which new shareholders can be admitted (subscription procedure, eligibility, board or president approval where the bylaws require it);
• describe the conditions under which shareholders can withdraw (notice period, redemption price, restrictions designed to protect the company against an exodus that would breach the floor).

Stating the ceiling is not optional drafting comfort. The Cour de cassation has held that a variability clause that fails to state the maximum authorised capital does not do its job: without that figure, every capital increase must be decided collectively by the shareholders under the ordinary conditions, on pain of nullity (Cass. com. 6 February 2007, n° 05-19237). A variability clause without a ceiling delivers none of the procedural saving the regime exists for.

The company's outward documents — and its legal notices — reflect the regime: every act and document addressed to third parties carries the mention « à capital variable » (C. com. Art. L 231-2), and the incorporation notice states the floor below which the capital cannot be reduced. The actual capital at any given moment sits within the range and changes as shareholders are admitted and withdrawn — the cap table and the share register record each movement.

A movement that would push the capital below the floor is forbidden — the company must refuse the withdrawal until the cap table is rebalanced. A movement that would push the capital above the ceiling is also forbidden — the company must run an ordinary capital-increase procedure to lift the ceiling first. The two boundaries are the strict limits of what the regime permits without procedure.

Adopting variable capital — or moving from fixed to variable capital after incorporation by a bylaws amendment — is not treated as an increase of the shareholders' engagements (this is the position of the ANSA legal committee). The amendment can therefore be passed by the majority the bylaws require for ordinary amendments rather than by the unanimity that increases of engagements would require.

The capital plancher and the capital autorisé in a French SAS variable-capital structure

The two boundary figures shape the regime.

The capital plancher. The floor is the minimum capital the company must keep regardless of withdrawals. The Commercial Code sets a hard lower bound: the bylaws must state a sum below which the capital cannot be reduced by the withdrawal of contributions, and that sum cannot be less than one-tenth of the share capital stipulated in the bylaws (C. com. Art. L 231-5). Within that constraint, the founders choose the level. In practice, the plancher is set well above the statutory minimum, at a level that protects the company's commercial credibility against a wave of withdrawals — typically the same level as the starting capital, sometimes lower as a controlled buffer. A floor pushed down to the legal minimum is rarely chosen, because a withdrawal-driven fall to that level would damage the company's standing with banks, suppliers, and counterparties.

The capital autorisé. The ceiling is the maximum capital the company can reach without an ordinary capital-increase decision. The figure should reflect the company's funding trajectory — high enough to absorb foreseeable rounds, low enough to keep the published range from looking unfocused. Setting the ceiling materially above the realistic trajectory creates a perception that the company expects much more dilution than it does; setting it below the trajectory forces an early bylaws amendment to lift the ceiling before the next round.

The two figures are not symmetrical in their procedural consequences. Lifting the ceiling requires a bylaws amendment by collective decision and the registry filing that goes with it. Lowering the floor — to allow a deeper redemption — is similarly a bylaws amendment with the standard formalities. Once set, the boundaries should be revisited only when the company's plan genuinely outgrows them.

The bylaws can also describe the par value of the shares issued under variable capital. New shares are typically issued at the par value fixed in the bylaws, but the bylaws can install a subscription premium for new entrants admitted at a later date when the company's underlying value has grown. The subscription-premium architecture is similar to that used in fixed-capital SAS but operates on a rolling basis.

Check a planned capital movement against your floor and ceiling

Enter the capital stipulated in your bylaws, the floor, the ceiling, and the capital level after the planned movement — and see whether the movement runs without procedure.

What happens when shareholders join or leave a French SAS under variable capital

The point of the regime is the simplicity of admission and withdrawal.

Admission of a new shareholder. The new shareholder subscribes the number of shares the bylaws make available, pays the subscription price (par value plus any premium), and is recorded in the company's share register. The cap table is updated; the variable capital figure rises by the par value of the new shares. No collective decision is taken. The bylaws decide whether admission requires the agreement of the president, the board, or any other body — but the decision is internal, not a capital-change formality.

Withdrawal of an existing shareholder. The withdrawing shareholder gives notice in the form the bylaws set. The company redeems the shares — by paying the withdrawing shareholder the value the bylaws set (par value, formula price, expert valuation under Art. 1843-4 of the Civil Code, or another agreed mechanism). The cap table is updated; the variable capital figure falls by the par value of the redeemed shares. Again, no collective decision is taken. On timing, the Cour de cassation has held that in a variable-capital company the withdrawal ends the obligations attached to shareholder status on the day of the withdrawal decision — even where the actual repayment of the contribution happens later so that the capital stays above the floor (Cass. com. 18 December 2024, n° 23-10695, decided for a SARL and, in the commentators' view, applicable to the SAS).

Exclusion of a shareholder. The variable-capital regime carries its own exclusion rule: the collective of shareholders can decide to exclude a shareholder at the majority required for bylaws amendments (C. com. Art. L 231-6, al. 2). The case law gives this real bite — an exclusion clause that follows that framework is valid even if it does not list limitative grounds for exclusion (Cass. com. 9 November 2022, n° 21-10540, decided for a SARL and transposable to the variable-capital SAS). For vehicles built on shareholder rotation, this is a structural tool the fixed-capital SAS does not offer on the same terms.

The bylaws can — and should — install protective rules to prevent withdrawals from running the company down to the floor in an uncontrolled way. Common protections include a minimum holding period before withdrawal is permitted, a notice period that gives the company time to find a replacement, a cap on the total value of withdrawals in a given quarter or year, and a discretionary withdrawal-approval power held by the president or a designated body.

A specific rule from the case law applies to the pre-emptive subscription right in a variable-capital SAS — see the next section.

The pre-emptive subscription right (DPS) under variable capital in a French SAS

In a fixed-capital SAS, existing shareholders have a pre-emptive subscription right (droit préférentiel de souscription — DPS) on every cash capital increase (C. com. Art. L 225-132): they can subscribe new shares pro-rata to their existing holding before the company opens the issue to new entrants. The right protects existing shareholders against unwanted dilution.

In a variable-capital SAS, the DPS does not operate in the same way. The Cour de cassation has held that a variable-capital company can carry out capital increases without reserving any pre-emptive subscription right to the existing shareholders (Cass. crim. 13 November 1990, n° 89-83233). On the prevailing reading, shareholders of a variable-capital SAS therefore have no DPS on issues within the range: by subscribing to a variable-capital company, they accept in advance the maximum dilution that would result from the allocation of the not-yet-subscribed part of the capital maximum fixed in the bylaws. Nor does the decision to lift the ceiling itself trigger a DPS — the shareholders are amending a boundary, not deciding an issue.

The point matters most for control-sensitive shareholders. A shareholder in a variable-capital SAS who wants to maintain a specific ownership percentage cannot rely on the statutory DPS to do it. The bylaws must install an alternative mechanism — a contractual pre-emption right, an anti-dilution clause, or a class of shares with a built-in protection.

Founders incorporating with variable capital should therefore look at the cap-table dynamics carefully. Where one or more shareholders need protection against rolling dilution, the bylaws need to install that protection explicitly; the regime does not give it by default.

The employee share-offer rule under variable capital in a French SAS

In a fixed-capital SAS that has employees, every decision to increase the capital in cash — unless it results from the prior issue of securities giving access to capital — must be accompanied by a separate vote on a resolution proposing an employee share offer under Art. L 225-129-6 of the Commercial Code. The vote is mandatory, even where the company knows it will reject the proposal. An increase decided without the employee resolution could historically be voided; since 1 October 2025, under the reformed nullities regime, nullity is no longer automatic and the courts weigh the breach — and the omission can in any event be regularised by a later collective decision on the omitted resolution alone (Cass. com. 28 November 2018, n° 16-28358).

The L 225-129-6 obligation is incompatible with the variable-capital clause — this is the position of the ANSA legal committee, reasoned on two situations:

• Intercalary issues: when new shares are issued within the variable range — below the ceiling — no collective capital-increase decision is taken, and there is therefore no occasion at which a separate employee-resolution vote could be slotted in.
• Decisions to lift the ceiling: when the shareholders amend the bylaws to raise the capital autorisé, the decision is not itself a capital increase — not even a potential one, as a delegation of competence would be — the shareholders are simply setting an upper bound on a capital that may or may not later move up to it.

Variable-capital SAS therefore operate outside the employee-resolution regime. Founders considering variable capital should weigh this point against the possibility that future investors or future workforce dynamics make an employee equity offer relevant. The variable-capital regime is not the right starting point for a company that expects to layer in an employee equity scheme integrated with capital increases.

Variable capital vs fixed capital in a French SAS: the cap-table comparison

The two regimes look similar at first glance — capital is capital, shares are shares — but the day-to-day mechanics differ in ways that matter.

Transparency to counterparties deserves a word. Banks, suppliers, and investors who are used to fixed capital can read the variable-capital range as a signal of fluid ownership — sometimes a positive (a vehicle designed for shareholder turnover) and sometimes a negative (a vehicle that does not commit to a stable capital structure). The choice between fixed and variable capital is therefore not solely operational but also positional.

Variable capital in a French SAS vs SARL vs SA

Variable capital is permitted in two of the three main commercial forms.

The SAS. Full availability under Arts. L 231-1 et seq. — the prohibition that targets the SA does not extend to the SAS. The contractual freedom of the SAS allows the founders to design the admission, withdrawal, plancher, and capital autorisé regime in detail.

The SARL. Variable capital is also available, on the same statutory basis. The SARL's tighter governance regime constrains some of the design freedom — the admission and withdrawal mechanics need to fit within the SARL's statutory framework — but the regime is operational.

The SA. Variable capital is prohibited. An SA cannot adopt the regime under any configuration. For a foreign group considering whether to incorporate as an SAS or as an SA in France, the variable-capital question is one of the points where the SAS holds a structural advantage if rolling capital movement is part of the funding plan.

A SARL or an SA incorporated with fixed capital can be transformed into a variable-capital SAS by the unanimous transformation procedure under Art. L 227-3 of the Commercial Code. The transformation is the path for an existing fixed-capital company that wants to migrate into the variable-capital regime; the cost is the unanimous shareholder consent and the procedural overhead of the transformation itself.

Frequently asked questions about variable capital 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 capital regime for a French SAS depends on the company's funding plan, its shareholder dynamics, and its medium-term strategy. Always seek qualified legal advice before adopting variable capital or migrating from fixed capital to variable capital.