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Issue Preferred Shares in French SAS
Empower your investors and optimize your capital structure with preferred shares (actions de préférence).
Our French corporate lawyers and paralegals handle every step for you — from drafting the terms and conditions of the preferred shares to updating your bylaws, coordinating shareholder approvals, and filing the issuance with the Commercial Court Registry.
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What are Preferred Shares (“Actions de Préférence”) in a SAS ?
Preferred shares are special classes of shares that grant specific financial or governance rights to certain shareholders.
They can offer privileged dividends, enhanced voting power, liquidation preferences, or anti-dilution rights, depending on the needs of your company and its investors.
In a SAS, the law provides exceptional flexibility to create these instruments. Preferred shares are used widely in venture capital, private equity, and corporate restructurings to attract investment while maintaining control over decision-making.
Our lawyers draft bespoke clauses that align with your company’s strategic goals and ensure compliance with the French Commercial Code.
Advantages of Issuing Preferred Shares in a SAS :
Flexible Structure: Define exactly what rights attach to the preferred shares—financial, voting, or informational.
Investor Confidence: Offer tailored protections (liquidation preference, anti-dilution, tag-along) without giving up full control.
Retention of Power: Founders can retain majority voting rights while granting investors measurable advantages.
Exit Planning: Preferred shares can include redemption, conversion, or buy-back clauses for future flexibility.
Compliant and Recognized: Issued under Articles L. 228-11 to L. 228-27 of the French Commercial Code, ensuring full legal enforceability.
Preferred shares are therefore a strategic equity tool—blending investor appeal with long-term control for the company’s founders.
How to Issue Preferred Shares in a SAS ?
Issuing preferred shares requires precise drafting and approval procedures.
Here is how FrenchCo.lawyer ensures a secure and compliant process:
Collecting Key Information
We determine your objectives: investment round, governance reorganization, or incentive plan. We define the nature of rights (dividend priority, enhanced voting, or liquidation preference) and identify affected shareholders.
Drafting Legal Documents
Our lawyers prepare the special report, shareholders’ resolutions, and the amendment to the bylaws that create the preferred share class. All documents are carefully aligned with the French Commercial Code and investors’ expectations.
Shareholder Approval and Meeting Formalities
We organize the shareholder meeting (or written consultation) to authorize the issuance, adoption of the amended bylaws, and delegation of authority to the President for implementation.
Issuance and Subscription Process
We coordinate subscription agreements with investors, verify payments, and update the share register to reflect the new class of preferred shares.
Filing with the Commercial Court Registry
The complete set of documents — amended bylaws, resolutions, issuance report, and registry forms — is filed with the RCS to make the operation legally effective
With FrenchCo.lawyer
All services are delivered by registered French corporate lawyers and supported by experienced paralegals. We combine legal precision, speed, and strategic insight, allowing you to issue preferred shares that are both compliant and investor-ready. Your company remains in full control — with all filings completed and verified for accuracy.
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What We Need From You to a Issue Preferred Shares in a SAS ?
To prepare and execute your preferred share issuance efficiently, we will request the following:
Company Information
Current Kbis extract, registered office address, share capital, and shareholder list.
Purpose and Structure of the Issuance
Whether it’s for new investors, employee incentives, or conversion of existing instruments.
Rights to Attach to the Preferred Shares
Define the financial rights (dividends, liquidation preference), governance rights (voting weight, board representation), and any conversion or redemption terms.
Investor or Subscriber Details
Identity, contribution details (cash or in-kind), and any special conditions negotiated in term sheets or investment agreements.
And Then?
Once all information is collected, our lawyers take care of the entire procedure: drafting, securing shareholder approval, publishing the legal notice, filing with the Commercial Court Registry, and providing certified proof of registration.
Issue Preferred Shares – Simple Process, Clear Budget
Flat legal fee starting from €1 190 excl. taxes*
Additional mandatory costs: publication in a legal gazette + court registry filing fees.
No hidden costs, no surprises.
Our commitment:
No generic share models
No third-party drafting
Only expert legal execution
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Why Choose Us?
We Believe in Transparent, Lawyer-Led Share Issuance and Structuring
Fast and reliable registration: From preference rights to conversion terms, we manage each step of your preferred share issuance precisely.
Legally compliant documentation: Every issuance and shareholder agreement complies with current French corporate law.
Protective drafting: Your share terms are designed to secure both investor expectations and founders’ long-term control.
High professional standards: All work is overseen by licensed French lawyers, ensuring accuracy, compliance, and accountability.
Let us handle your preferred share issuance — so you can focus on building and scaling your business in France.
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Understanding the Issuance of Preferred Shares in a French SAS
Can a French SAS issue preferred shares?
Yes.
Under Articles L.228-11 to L.228-27 of the French Commercial Code, a Société par Actions Simplifiée (SAS) may issue one or more categories of preferred shares (“actions de préférence”) with special rights that differ from ordinary shares.
These shares can be created at incorporation or by amendment of the bylaws (statuts). They allow the company to grant specific financial or governance advantages to certain shareholders—often investors, founders, or strategic partners—while keeping control over voting rights and management.
Preferred shares can be freely customized as long as they respect three legal principles:
- Equality within each class of shares;
- Compliance with corporate interest (intérêt social);
*No violation of mandatory shareholder rights (e.g., information, participation in profits).
What is the legal process to issue preferred shares in a SAS?
The creation of preferred shares follows a multi-step legal procedure:
- Drafting the proposal:
The President or board defines the rights and obligations attached to the preferred shares and the reasons for their creation. - Auditor’s review (in some cases):
If the issuance affects existing shareholders’ rights or involves in-kind contributions, an independent auditor (commissaire aux apports or commissaire aux avantages particuliers) must issue a report. - Shareholder approval:
The shareholders vote to authorize the creation and issue of the new class of shares. This decision is usually formalized in an extraordinary general meeting and requires amendment of the bylaws. - Subscription and payment:
The preferred shares are subscribed by investors, founders, or employees under the agreed conditions (cash or in-kind contribution). - Filing and registration:
The amended bylaws, resolutions, and supporting documents are filed with the Commercial Court Registry (RCS), followed by publication in a legal gazette.
Once the filing is accepted, the issuance becomes legally effective and opposable to third parties.
How are dividends and voting rights determined for preferred shares?
The bylaws define the economic and political rights attached to preferred shares.
- Dividends:
Preferred shareholders may receive:- A fixed or additional dividend percentage;
- A cumulative right to unpaid dividends in later years;
- Or no dividend privilege at all (in exchange for stronger control rights).
- A fixed or additional dividend percentage;
- Voting rights:
- Preferred shares can have one vote, multiple votes, or no vote at all.
- However, the total absence of voting rights must be compensated by enhanced financial advantages and must not deprive shareholders of their basic consultation rights.
- Preferred shares can have one vote, multiple votes, or no vote at all.
These arrangements make preferred shares an adaptable tool for balancing investor return and founder control.
What are the tax and accounting consequences of issuing preferred shares?
From a company perspective, preferred share issuance increases equity capital. The proceeds are not treated as taxable income. However, dividends paid on these shares are non-deductible expenses for corporate tax purposes.
From a shareholder perspective:
- Dividends are taxed under standard rules (flat 30% “PFU” or progressive income tax scale).
- Gains from redemption or conversion are treated as capital gains, with potential tax exemptions if held long-term.
In accounting terms, preferred shares are recorded in the share capital or premium accounts depending on their characteristics (equity vs. hybrid instrument).
- Dividends are taxed under standard rules (flat 30% “PFU” or progressive income tax scale).
Preferred Shares in a French SAS — What You Should Know
Purpose
Capital structuring tool: Used to attract investors or reward founders with differentiated rights while maintaining control.
Governance
Flexible bylaw design: The statuts define each class’s voting, dividend, and conversion rights, giving freedom in shareholder arrangements.
Investor Rights
Tailored privileges: Preferred shares can grant priority dividends, enhanced votes, or liquidation preference, depending on company needs.
Legal Framework
Code de commerce: Articles L.228-11 to L.228-20 regulate creation, transfer, and redemption of preferred shares within an SAS.
Approval Process
Shareholder vote required: An extraordinary general meeting must amend the bylaws before issuance.
Tax and Compliance
Tax-sensitive structure: Terms must avoid reclassification as debt; filings with the French RCS (Registry) are mandatory.
Who can hold preferred shares in a SAS?
Preferred shares may be held by any category of shareholder — founders, employees, venture funds, or corporate investors.
They are typically used to:
- attract outside investment without diluting control;
- reward early founders or key executives;
- structure convertible or redeemable instruments for financing rounds.
There is no restriction based on nationality. Foreign investors can freely subscribe to preferred shares in a SAS, subject only to compliance with anti-money-laundering and foreign investment control regulations for sensitive sectors (defense, critical technologies, etc.).
What kinds of rights can be attached to preferred shares?
Preferred shares can carry a wide variety of financial, voting, and information rights. French corporate law allows considerable flexibility. Examples include:
- Financial privileges:
- Priority or additional dividends;
- Preferential treatment in profit distribution;
- Liquidation preference (priority repayment if the company is sold or liquidated).
- Priority or additional dividends;
- Governance rights:
- Multiple or reduced voting rights;
- Veto powers on certain strategic decisions;
- Right to appoint a board observer or representative.
- Multiple or reduced voting rights;
- Conversion or redemption features:
- Convertible into ordinary shares after a certain event (e.g., IPO, acquisition);
- Redeemable at par or at a premium after a set period;
- Linked to performance milestones.
- Convertible into ordinary shares after a certain event (e.g., IPO, acquisition);
All such rights must be clearly defined in the bylaws and justified by a report from the President or statutory auditor when applicable.
Are preferred shares subject to a minimum capital or valuation requirement?
No.
There is no statutory minimum capital for issuing preferred shares in a SAS. However, the value of the preferred shares must be justified and recorded in the issuance report to ensure fair treatment of all shareholders.
In practice:
- The nominal value of each share must be consistent with the company’s share capital.
- If the preferred shares include special financial advantages (e.g., higher dividends), they must not disproportionately harm other shareholders.
- When issued to investors, the price per share is often higher than the nominal value (reflecting company valuation and negotiated rights).
Auditors’ intervention ensures transparency and legal fairness, particularly in fundraising or restructuring scenarios.
Can preferred shares be converted or redeemed later?
Yes.
Preferred shares can include conversion, redemption, or repurchase clauses, provided they are clearly specified in the bylaws or issuance agreement.
- Convertible preferred shares can be exchanged for ordinary shares when certain conditions are met (e.g., financing round, IPO, or time lapse).
- Redeemable preferred shares allow the company to repurchase or cancel them at a predetermined price.
- Hybrid clauses may combine both options (convertible then redeemable).
Each operation (conversion or redemption) must be recorded in the company’s share register and may require a new registry filing.
Can preferred shares be used in employee incentive plans or fundraising?
Yes — and this is one of their most strategic uses.
In fundraising, preferred shares let founders offer investors financial protection (liquidation preference, anti-dilution) while retaining majority control.
In employee incentive schemes, companies may grant convertible preferred shares that become ordinary shares once performance targets are achieved, aligning employee interests with company growth.
These operations must comply with corporate governance principles, securities regulations, and, if applicable, French labor code provisions on employee participation.
Issue Preferred Shares in Your SAS
Let our French lawyers & paralegals structure and register your preferred shares for you.
More About Issuing Preferred Shares in a French SAS
Can preferred shares be issued in any SAS?
Yes. Any SAS can issue preferred shares (actions de préférence) if its bylaws authorize their creation. They may be created during incorporation or later via an extraordinary shareholders’ meeting.
Who can hold preferred shares?
Both individuals and legal entities, French or foreign, may subscribe to preferred shares. This flexibility helps attract strategic investors, venture capital, or business angels.
What rights can preferred shares grant?
They can include priority dividends, enhanced voting, or liquidation preference. The exact rights are freely defined in the company’s bylaws or issuance act.
Do preferred shares require a notary?
No. Their issuance is handled by lawyers or corporate officers through bylaw amendments and registry filings — no notarial act is required.
Are preferred shares subject to registration?
Yes, each issuance must be recorded with the French Commercial Registry (RCS) after shareholder approval and filing of updated bylaws.
Can preferred shares be converted or redeemed?
Yes. The terms may include conversion into ordinary shares, or redemption by the company under specified conditions set in the bylaws.
What are the typical legal and tax considerations?
Preferred shares must not resemble debt instruments, to avoid tax reclassification. Legal counsel ensures compliance with Articles L.228-11 to L.228-20 of the French Commercial Code.
Can I issue preferred shares to future investors only?
Yes. You can authorize preferred shares in advance and reserve their issuance for future investors or employees. This allows flexible fundraising or incentive plans without immediately changing the share capital structure.
