Decisions That Must Be Taken by Shareholders in an SAS

The Société par Actions Simplifiée (SAS) is renowned in French corporate law for its flexibility. Unlike the more rigid société anonyme (SA), the SAS allows its shareholders to organize internal governance largely by contract. This freedom makes it possible to design tailor-made decision-making structures that suit the company’s size, industry, and shareholder profile.

But this freedom has limits. Certain decisions are so fundamental that the law requires them to be taken collectively by the shareholders. Others may be allocated to them on an optional basis, depending on what is written in the bylaws. Understanding the distinction between mandatory and optional shareholder powers is essential to drafting effective bylaws and avoiding future disputes.

This article sets out the main rules governing shareholder decisions in an SAS, with a focus on the balance between legal requirements and contractual flexibility.

1. The Principle of Establishing Freely in the Bylaws Which Decisions Must Be Taken By Shareholders

Article L. 227-9, paragraph 1 of the French Commercial Code establishes the basic principle:
“The bylaws determine the decisions that must be taken collectively by the shareholders, in the forms and under the conditions they set.”

This gives the bylaws of an SAS a structuring power. The bylaws decide:

• Which matters require shareholder approval.

• How shareholders must be consulted (assembly, written consultation, electronic voting, videoconference, etc.).

• The quorum and majority rules for adoption.

• The practical formalities of decision-making.

Unlike an SA, where the law prescribes a formal framework for general meetings, the SAS allows enormous procedural flexibility. Shareholder decisions can result from a unanimous written agreement, a simple online consultation, or a physical meeting, depending on what the bylaws provide.

This freedom allows the company to adapt its decision-making processes to the needs of its shareholders, the nature of its business, or the distribution of its capital.

2. Decisions That Must Be Taken by Shareholders (Mandatory Domain)

Even though the bylaws enjoy broad freedom, the law requires that certain decisions be taken collectively by the shareholders. This safeguard ensures that fundamental changes to the company cannot be imposed unilaterally by directors.

2.1 Core Decisions Explicitly Required by Law

Article L. 227-9, paragraph 2 of the Commercial Code lists several decisions that shareholders must approve:

• Increase, reduction, or amortization of share capital.

• Mergers or demergers.

• Early dissolution of the company.

• Transformation into a different company form.

• Appointment of the statutory auditor.

• Approval of annual accounts and allocation of profit.

In an SA, these matters fall under the powers of ordinary or extraordinary general meetings. In an SAS, they are handled collectively by the shareholders, but the form and procedure are defined in the bylaws. This means that even these fundamental decisions can be made via written consultation or digital platforms, as long as the bylaws allow it.

2.2 Other Decisions That the Law Reserves for Shareholders

In addition to the list above, French company law requires shareholder involvement in other important areas, even if not explicitly mentioned in Article L. 227-9:

• Approval of related-party agreements. Deals between the company and its directors or major shareholders must be approved by the shareholders to avoid conflicts of interest.

• Continuation of activity in case of losses. If half of the share capital is lost, shareholders must decide whether to continue operations (Article L. 225-248 C. com.).

• Share buybacks. Decisions for the company to repurchase its own shares require shareholder consent.

• Appointment of a liquidator. If the company dissolves, shareholders designate the liquidator.

• Increases in shareholder commitments. A shareholder cannot be forced to commit more than originally agreed without his or her express consent.

• Adoption or modification of certain restrictive clauses. In particular, inalienability clauses or preemption rights in the bylaws require shareholder approval (Article L. 227-19).

These rules apply regardless of what the bylaws say. Even if the bylaws are silent, shareholders must still decide. Ignoring these obligations may result in the nullity of the decision or, in some cases, even criminal liability if public policy is breached.

3. Decisions Allocated to Shareholders in the Bylaws (Optional Domain)

Beyond the mandatory matters listed above, the bylaws may allocate a much broader role to shareholders. This is sometimes called the “optional” or “contractual” domain.

Examples of common powers reserved to shareholders in the bylaws include:

• Appointment, removal, and remuneration of directors.

• Approval of strategic orientations or business plans.

• Authorization of major projects or investments.

• Adoption of ESG (environmental, social, governance) policies.

• Choice of accounting methods.

• Approval of acquisitions or disposals of subsidiaries.

• Authorization of commitments above a certain financial threshold.

This contractual freedom allows shareholders to shape governance according to their preferences. In family-owned businesses, for instance, shareholders may wish to control the appointment of directors. In startups, investors may require shareholder approval for major expenditures.

Important warning: if shareholders retain too much control over day-to-day management, they risk being reclassified as de facto directors, with potential liability for mismanagement.

4. The Special Case of the SASU

The single-shareholder SAS (SASU) represents a simplified case. Under Article L. 227-1, paragraph 2, the sole shareholder exercises all powers normally attributed to shareholders collectively.

This means:

• The sole shareholder takes every decision personally.

• If the shareholder is a company, its legal representative takes the decisions.

• Delegation of powers is not allowed (Article L. 227-9, para. 3), unless expressly authorized by law.

While simpler in practice, the SASU must still comply with legal formalities (e.g., keeping a decision register).

5. Validity Conditions for Shareholder Decisions

For shareholder decisions to be valid, both the bylaws and the law must be respected.

5.1 Decision-Making Modalities

The bylaws decide:

• The method of consultation (assembly, written consultation, or signed deed).

• The quorum and majority required.

• Notice periods for convening or responding.

• Information and communication formalities.

Unlike the SA, the SAS has no statutory majority thresholds. The bylaws may freely define majority rules. However, case law imposes certain limits.

Example: In a decision of 19 January 2022, the Court of Cassation ruled that a minority clause—allowing a decision to be adopted by less than 50% of the votes—was invalid because it prevented “distinguishing supporters and opponents.”

5.2 Decisions Requiring Unanimity

Certain decisions must always be taken unanimously:

• Any increase in shareholder commitments.

• Adoption of variable capital.

• Transformation into a company with unlimited liability.

• Transfer of the registered office outside the EU.

• Adoption of inalienability or change-of-control clauses (Article L. 227-19).

The bylaws may also impose unanimity for other matters, though they can choose to soften it (for instance, requiring unanimity only among those voting).

6. Procedures, Evidence, and Formalization of Shareholders Decisions in a SAS

Shareholder decisions must be properly documented. In practice, this means:

• Minutes of decisions (freely drafted, except for SASU where form is more prescribed).

• Decision register, which is mandatory for SASU.

• Electronic record-keeping, with advanced electronic signature if decisions are taken digitally (Article R. 227-1-1).

The bylaws may tailor the level of formalism. Many companies choose to digitalize their entire decision-making process, allowing efficient remote consultations and secure electronic archiving.

Conclusion: Freedom Within Boundaries

The SAS stands out in French corporate law because of the broad contractual freedom given to its shareholders. Through the bylaws, they can design governance rules that suit their project, from informal written consultations to highly structured decision-making processes.

But this freedom is not unlimited. The law reserves to shareholders a series of mandatory powers, especially for structural matters like capital changes, mergers, approval of accounts, or continuation of activity in case of losses. Ignoring these rules risks invalidating decisions or triggering liability.

The key to success in an SAS lies in the bylaws. They must:

• Clearly allocate powers between shareholders and directors.

• Define practical decision-making procedures.

• Anticipate both mandatory and optional shareholder rights.

A well-drafted set of bylaws ensures governance that is both flexible and secure, protecting shareholders while allowing the company to operate efficiently. For entrepreneurs, this makes the SAS a uniquely powerful and adaptable corporate form.