Liability of Shareholders in an SAS: Towards the Company and Third Parties

The Société par Actions Simplifiée (SAS) is one of the most popular corporate forms in France. Its appeal lies in its flexibility, its modern governance model, and the strong protection it offers shareholders through limited liability. Like other joint-stock companies, the SAS is based on the principle that shareholders are only liable for company debts up to the value of their contributions.

But this protection is not absolute. French law and case law recognize several important exceptions where shareholders may incur civil or even criminal liability. These situations range from personal misconduct and abuse of voting rights to professional liability in regulated activities.

This article explores, in depth, the scope of shareholder liability in an SAS, the main exceptions to limited liability, and the practical consequences for entrepreneurs, investors, and third parties dealing with the company.

1. The General Principle: The Liability of Shareholders of SAS is Limited to Their Capital Contributions

The cornerstone of the SAS regime is the principle of limited liability. Under Article L. 227-1 of the Commercial Code, shareholders are only liable for company debts up to the amount of their contributions.

This rule has several key implications:

• Company creditors cannot pursue shareholders directly for repayment of company debts.

• Shareholders’ personal assets are protected, except to the extent of their contributions.

• The risk of investment is contained, which encourages entrepreneurship and capital raising.

For example, if a shareholder subscribes €50,000 in shares but the company later defaults on a €1 million debt, the shareholder is not personally liable beyond that €50,000. The unpaid balance remains with the company’s creditors.

This principle is what makes the SAS attractive to entrepreneurs and investors. However, it is not a shield against all forms of misconduct.

2. Exceptional Civil Liability: The “Separable Fault”

2.1 Definition

French case law recognizes that a shareholder can be held personally liable if they commit a fault separable from the normal exercise of shareholder rights. This is known as a “separable fault” (faute détachable).

A separable fault exists when:

• The conduct is intentional.

• The fault is of particular seriousness.

• The behavior is incompatible with the normal and loyal exercise of shareholder rights.

It is not presumed: courts require clear evidence that the shareholder acted maliciously or with gross misconduct.

2.2 Case Law Examples

• Not recognized: A shareholder votes for a resolution that indirectly breaches a company obligation, but without malicious intent (Cass. com., 2014).

• Not recognized: A shareholder who also sits in another company uses their reputation to promote a failing real estate project, but without directly committing a wrongful corporate act (Cass. com., 2024).

• Recognized: A shareholder deliberately votes to remove a director with the proven intent to cause harm.

The threshold for separable fault is therefore very high. Ordinary misjudgments or business disagreements do not suffice. Only malicious or manifestly abusive conduct will engage personal liability.

3. Other Situations of Civil Liability For The Shareholders of a SAS

Beyond separable fault, French law recognizes several other ways in which shareholders may incur liability.

3.1 Abuse of Voting Rights

Shareholders may not use their voting rights in a way that:

• Contradicts the company’s interest, or

• Seeks exclusively to favor their own personal interest.

If abusive voting causes harm to the company or other shareholders, liability may follow.

Example: A shareholder blocks strategic decisions purely to pressure the company into buying back their shares at an inflated price.

3.2 Fraudulent Dissolution

If shareholders engineer the dissolution of the SAS for fraudulent purposes—for example, to avoid paying debts or to escape judicial enforcement—they can be held personally liable for the damage caused.

3.3 Defamation or Denigration of Directors

Shareholders remain free to criticize management, but if their remarks are malicious, unfounded, or aimed at harming a director’s reputation, liability may arise.

However, the European Court of Human Rights has emphasized that minority shareholders must retain freedom of expression on matters of general interest. In a 2020 case (ECHR, 30 June 2020, n° 21768/12), a shareholder who publicly criticized management was protected under the right to free debate.

4. Liability of The Shareholders of SAS Related to Contributions

4.1 Overvaluation of Contributions in Kind

When setting up an SAS or increasing its capital, shareholders may make contributions in kind (real estate, equipment, intellectual property, etc.). If a shareholder deliberately overvalues such a contribution, they may be liable to:

• The company,

• The other shareholders, or

• Third parties harmed by the overvaluation.

(Cass. com., 28 June 2005; Cass. com., 26 Apr. 2017).

4.2 Fraudulent Undervaluation

Case law has also addressed fraud by undervaluation. For example, when a beneficiary company is deliberately undervalued during a contribution in order to unfairly dilute minority shareholders, liability may be triggered (Cass. com., 30 Sept. 2020).

Here, the harm is not to the company’s interest but directly to the rights of minority shareholders. Courts treat this as a fraud against shareholder rights.

5. Professional Civil Liability of The Shareholders of SAS in Regulated Professions

A new dimension of shareholder liability was introduced by the Ordinance of 8 February 2023, effective 1 September 2024.

Shareholders of an SAS who practice a regulated liberal profession—lawyers, notaries, judicial administrators, and others—are personally liable for the professional acts they perform. This applies even when they operate through an SAS rather than a specialized structure like an SELAS.

Key points:

• The company is jointly liable, but this does not exempt the professional shareholder.

• The shareholder’s personal assets may be pursued for professional errors.

• The rule applies equally to SAS structures exercising legal or judicial professions in common form.

This means that investor-shareholders and professional-shareholders must be distinguished. While passive investors retain limited liability, professionals who provide services within the SAS remain personally accountable for their professional acts.

6. Criminal Liability of The Shareholders of SAS

In addition to civil liability, shareholders may face criminal sanctions in specific situations.

6.1 Fraudulent Overvaluation of Contributions

Article L. 242-2 of the Commercial Code provides that shareholders who knowingly participate in the fraudulent overvaluation of a contribution in kind (during incorporation or capital increase) may be criminally liable.

Penalties include:

• Up to 5 years’ imprisonment,

• Fines of €375,000, with higher amounts possible in aggravated circumstances.

6.2 Other Offences

Though less common, shareholders may also be prosecuted for:

• Vote trafficking at shareholder meetings (false votes, corruption, or coercion).

• Misuse of company assets (abus de biens sociaux), but only if they also act as directors.

• Complicity in offences committed by the company itself.

Conclusion: Limited, But Not Absolute Protection

The SAS is rightly considered a protective structure for shareholders, since liability is in principle limited to contributions. But this protection has clear boundaries.

Shareholders may face personal liability in cases of:

• Abusive or fraudulent conduct (separable fault, abuse of voting rights).

• Misrepresentation in contributions (overvaluation or undervaluation).

• Professional liability when exercising regulated activities.

• Criminal offences linked to fraud, corruption, or complicity in company crimes.

The message is clear: being a shareholder in an SAS does not mean total immunity. While the law encourages investment by limiting exposure, there are red lines not to be crossed.

For entrepreneurs and investors, the best safeguards are:

• Acting with prudence and transparency,

• Respecting the procedures set out in the bylaws,

• Avoiding conflicts of interest,

• And seeking legal advice before high-stakes decisions.

In short, the SAS remains one of the most flexible and protective business vehicles under French law, but shareholders must remain aware of their potential personal exposure in exceptional cases.