Pros and Cons of a SAS: Is It a Good Choice?

The SAS (Société par Actions Simplifiée) is today one of the most versatile legal forms in French law. Thanks to its organizational flexibility, it can be used in extremely varied contexts: corporate groups, family businesses, private equity, joint ventures, social economy, or startups.

A company form serving all types of businesses

The great strength of the SAS is that it adapts to companies of all sizes and almost every sector. From the tech startup to the cooperative company, from the family holding to the international joint venture, it offers a legal framework that is both flexible and secure.

Here are the main situations in which the SAS stands out as a strategic choice — before weighing its pros & cons in practice.

SAS in corporate groups: almost always a good choice 

In a corporate group, the SAS makes it possible to easily structure:

• autonomous subsidiaries with a single shareholder (the parent company) and a sole president,

• joint ventures bringing together several entities around a common project,

• strategic holdings capable of locking in the capital or structuring relations between shareholders.

It facilitates legal management thanks to:

• tailor-made governance,

• bylaws integrating internal control rules (limits of commitment, powers, co-signatures…),

• the possibility of appointing legal entities as directors,

• reporting and operation adapted to matrix or multi-activity logics.

The SAS is also used as a defensive tool: certain companies employ it to lock in shareholdings or to protect themselves against hostile takeovers via an intermediate holding.

However, if the company intends to be listed on a stock exchange, it must first be converted into a Société Anonyme (SA), as only this form is eligible for public listing under French law.

Pros & Cons of opting for a SAS in a family business

The SAS is an excellent choice for a family holding company. Its simplicity of management attracts many SMEs with family shareholding. It offers:

• a light operation, without a mandatory board of directors,

• governance that can be transferred without complexity,

• the possibility of separating capital and power, for example by transferring the shares while keeping the presidency.

It makes it possible to manage successions smoothly: the business owner can remain in control while gradually transferring the capital to his heirs, with bylaws ensuring that the power of management remains in the hands of a single family member.

However, the SAS may also have some disadvantages specifically when used as a business operational entity:

• Higher social charges: the president of a SAS is assimilated to an employee and cannot benefit from the self-employed (TNS) regime, which is often more economical for small family-owned structures.

• More complex bylaws drafting: the contractual freedom of the SAS requires careful legal drafting to prevent family conflicts, which can increase initial costs.

• Corporate tax regime: unless opting temporarily for income tax (max 5 years), the SAS is subject to corporate tax, which may be less favorable than the SARL in certain family wealth-transfer strategies.
  

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The SAS is the vehicle of choice of private equity and venture capital investors

The SAS is the preferred legal vehicle of private equity and venture capital, notably in the context of:

• LBO (leveraged buy-out),

• Venture capital,

• Growth capital.

This success is explained by its ability to integrate precise clauses, such as:

• reinforced information rights for investors,

• approval, pre-emption, exclusion or withdrawal clauses,

• preference shares with priority dividend or adjusted political rights,

• liquidity mechanisms upon exit (drag-along, tag-along, put option…),

• sweet equity mechanisms.

For minority investors, the SAS allows a fine contractualization of power. For majority investors, it allows smoother control without multiplying management bodies.

If you are contemplating to raise capital, you should opt for a SAS.

Is the SAS Compatible with the Social and Solidarity Economy? Pros & Cons of Choosing a SAS

Yes. Since the 2014 Social and Solidarity Economy Law (ESS), commercial companies such as SAS can be recognized as solidarity companies of social utility (ESUS) provided they meet certain criteria:

• having a social or environmental purpose,

• allocating a significant part of profits to reserves,

• guaranteeing democratic governance, notably through the participation of employees or stakeholders.

The flexibility of the SAS makes it possible to create mechanisms of consultation, representation, and control adapted to the specific requirements of this sector.

It can also be used as a société à mission, since the 2019 PACTE Law, for companies pursuing a general-interest objective in their corporate purpose.

Pros: flexibility, legal recognition (ESUS), adaptability to governance rules, possibility of “mission-driven company” status.

Cons: increased regulatory constraints, profit distribution limits, need for complex bylaws to ensure compliance with ESS principles.

The use of SAS in Joint Ventures: is it a good choice?

The SAS is the ideal structure for joint ventures, especially when several groups or partners wish to collaborate on a common project. It makes it possible to:

• clearly define the distribution of capital and responsibilities,

• provide for tailor-made governance rules (rotating presidency, strategic committee, veto rights),

• facilitate the exit of one of the partners through statutory clauses (buy-sell, shotgun clause, etc.).

The largest French groups use it in emblematic partnerships: Airbus, Renault–Nissan, BNP–Crédit Mutuel–Société Générale, Accor–Pierre & Vacances, etc.

Pros: clarity of capital allocation, customizable governance, contractual exit mechanisms.

Cons: requires sophisticated drafting of bylaws, potential complexity in balancing powers, and higher legal costs compared to simpler structures.

Pros & Cons of Using a SAS in Regulated Activities

The SAS is an extremely flexible company form, but this freedom has legal limits. Some activities are formally prohibited for SAS, while others are subject to specific conditions or prior authorization.

Which activities are prohibited for SAS?

Insurance and reinsurance

The law prohibits the use of the SAS by insurance and reinsurance companies, which must obligatorily adopt the form of SA, European company (SE), or mutual (French Insurance Code, art. L. 322-1).

Management of retirement savings

Organizations managing retirement savings funds must also be incorporated under the form of SA, mutual insurance, or mutualist organization (Law of March 25, 1997).

Other excluded forms

Some activities cannot be carried out under the form of SAS, notably:

• SICOMI (real estate companies for commerce and industry),

• deferred credit companies,

• investment and management real estate companies,

• public housing companies (SA d’HLM, cooperative SA d’HLM),

• local mixed economy companies (SEM), except for specific exceptions.

In all these cases, only SA or SARL (depending on the case) are authorized.

Which regulated activities are open to SAS?

Certain activities remain accessible to SAS, but subject to strict conditions, especially regarding authorization, governance, or internal organization.

Credit institutions and investment firms

SAS may be used provided they obtain ACPR authorization. However:

• SAS are excluded if the company must call on public savings,

• a collegial supervisory body independent from the president or CEO must be provided,

• any amendment to the bylaws must be notified to the ACPR.

Intercompany credit 

Since the Macron Law of 2015, SAS may grant loans to other companies if they meet certain conditions:

• accounts certified by a statutory auditor,

• a real economic link with the beneficiary company,

• no obligation to submit the loan agreement to the regulated agreements procedure.

Portfolio management companies

Management companies authorized by the AMF are almost exclusively incorporated under the SAS form. Governance must separate management and investment functions, with formal AMF oversight.

Financial and digital service providers

Many SAS are authorized as:

• PSAN (Digital Asset Service Providers),

• PSFP (Crowdfunding Platforms),

• SICAV, since the 2011 ordinance, provided they meet specific organizational requirements.

The SAS in specialized sectors: Pros & Cons of the Choice

Mixed economy companies (SEM)

Local SEMs cannot be incorporated as SAS, except for exceptions provided by decree for specific projects (notably in energy or “village power plants”).

SIDER (investment companies for rural development)

SIDER may adopt the SAS form, provided they establish a board of directors or supervisory board and ensure representation of the regions in the capital.

Sports companies

Since 2012, professional sports clubs may be incorporated as SAS above a certain revenue threshold. The SAS is even preferred here, due to its flexibility compared to the SA or SAOS.

Cooperative companies

Some SCOP and collective-interest cooperative companies (SCIC) may now adopt the SAS form. This makes it possible to integrate:

• capital variability,

• the cooperative principle “one person, one vote,”

• mechanisms of exclusion or collective representation,

• hybrid financing (preference shares, bonds, cooperative certificates, etc.).

By contrast, artisan, maritime, or retail cooperatives are excluded from this regime and must remain in SARL or SA.

In summary: the SAS is generally an excellent choice subject to certain limitations

The SAS is authorized in the majority of sectors, but some activities are prohibited or require an adapted statutory framework. Before choosing the SAS form for a regulated activity, it is essential to verify:

• compliance with sectoral legislation,

• compatibility with specific governance rules,

• approval of the supervisory authorities (ACPR, AMF, etc.).
  

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