The SAS (Société par Actions Simplifiée) has become one of the most popular company forms in France because of its exceptional flexibility. Unlike other structures, it does not follow a rigid, one-size-fits-all model. Instead, its functioning depends largely on the statutory freedom that French law gives to its founders, who are free to imagine, design, and tailor the company’s organisation to their specific needs.
This freedom is both an advantage and a risk. On the one hand, it allows shareholders to design governance rules that fit their project perfectly. On the other, poorly drafted or incomplete bylaws can create legal uncertainty and even block the company’s operations.
Our legal team designs precise, compliant, and strategic statutory frameworks, ensuring your company benefits from flexibility without exposing itself to governance risks, conflicts, or legal uncertainty.
1. The Organization of the SAS: a Blank Page to Write
The very foundation of the SAS lies in the contractual freedom of its founders. Articles L. 227-5 and L. 227-9 of the French Commercial Code leave it to the bylaws to organize:
-
the conditions of management of the company,
-
the collective decisions to be taken by the shareholders,
-
and the control of the capital (approval clauses, inalienability clauses, etc.).
Unlike the SA or the SARL, the law does not impose any rigid organizational scheme: no mandatory board of directors, no required form of general assembly. It is therefore the shareholders who freely determine the internal functioning.
In practice: this freedom is not optional but mandatory. Explicit rules must be provided in the bylaws, otherwise the company risks paralysis.
2. The Exclusive Legal Force of the Bylaws
The Court of Cassation has repeatedly recalled that only the bylaws define the rules of organization of the SAS.
Example: an agreement between a director and a sole shareholder providing for compensation in case of dismissal is not valid if it does not appear in the bylaws.
As a result, even where shareholder agreements or internal regulations exist, the statutory provisions prevail. If a pact contradicts the bylaws, it will be unenforceable.
We help founders and shareholders draft tailored SAS bylaws and shareholders’ agreements that align seamlessly, prevent conflicts, and ensure smooth, legally secure corporate functioning from day one.
3. Publicity of the Bylaws: Transparency and Its Limits
The bylaws must be filed with the registry and updated with every amendment. This publicity allows third parties to access the company’s operating conditions, makes some clauses enforceable against third parties (for example, the appointment of a director, or an approval clause), but may also interfere with the discretion sought by shareholders regarding sensitive clauses (cross-shareholdings, power distribution, etc.).
Tip: to preserve confidentiality, drafters may use general wording in the bylaws and refer details to extra-statutory agreements.
4. Bylaws and Extra-Statutory Agreements: Coexistence and Complementarity
The development of shareholder agreements has led the legislator to tolerate them, and even integrate them into the SAS framework. However, their coexistence is complex:
| Criterion | Bylaws | Shareholders’ Agreement |
|---|---|---|
| Publicity | Mandatory (registry) | No (confidential) |
| Enforceability | Yes (under conditions) | No, except in special cases |
| Modification | According to statutory procedure | Generally unanimous, unless otherwise agreed |
| New shareholders | Automatically bound | Must expressly adhere |
| Duration | Up to 99 years | Often limited; may be terminated unilaterally if indefinite |
Useful case law: third parties may invoke a shareholders’ agreement to which they are not a party if its violation caused them damage (e.g., breach of a non-compete clause). Similarly, a shareholders’ agreement can be relied upon by an employee if it contains dismissal procedures that were ignored.
An Example: Appointment of Directors: In a SA, the general assembly is sovereign, voting agreements are fragile, and allocating positions is cumbersome.
In a SAS, it is enough to provide in the bylaws that such-and-such a shareholder, or class of shareholders, shall appoints the director. These rights can be further formalized in a shareholders’ agreement and are enforceable.
However, in case of conflcit between a shareholders’ agreement and the bylaws, generally the bylaws prevail. It is therefore very important to ensure that these two documents are drafted in a consistent way and do not contain conflicting terms.
5. Risks of Omissions or Vagueness in the Bylaws
Statutory freedom gives SAS shareholders unique latitude in governance. But it comes at a price: rigorous drafting is essential.
Unlike what the Field report initially proposed, the SAS regime does not import SA rules by default. Article L. 227-1 of the Commercial Code expressly excludes SA provisions on governance.
In plain terms: if the SAS bylaws say nothing, they are not automatically supplemented by SA rules. Silence can mean dysfunction.
The law does set some safeguards:
-
By default, the president holds all powers, except those expressly reserved for the shareholders by law (e.g., amendment of bylaws, increasing commitments, extending duration).
-
Article L. 227-9 reserves to the bylaws the determination of how collective decisions are made, but does not impose a fixed procedure.
Case law: in a 2008 Paris Court of Appeal ruling, shareholders themselves validly convened a meeting in the absence of statutory rules.
Bottom line: vague or incomplete bylaws risk paralyzing the company. Judges will not fill the gaps based on past practices.
Points of vigilance:
-
Do not rely on SA rules: write all governance rules in the bylaws.
-
Specify procedures for notice, quorum, voting, and decision-making.
-
Make majority rules explicit — practices cannot replace clear wording.
6. Binding Effect and Enforceability of Bylaws
The bylaws bind shareholders, directors (who may be held liable for violation), and, for certain clauses, third parties (capital, approvals). Decisions taken in breach of the bylaws may be annulled (art. L. 227-9).
7. Modification and Derogation
Bylaws may be amended:
-
According to the procedures they themselves provide (simple majority, qualified majority, veto rights, etc.);
-
By bodies other than the general assembly (director, committee, or even third party).
Formalism is critical: clauses such as non-compete or indemnification are only valid if adopted in the required statutory form.
Key Takeways
- The SAS is a contractual company: bylaws are its constitution.
-
Never neglect statutory drafting: bylaws > shareholder agreements.
-
Courts increasingly favor clarity and traceability of statutory commitments.
-
SAS offers exceptional flexibility, but requires precise, anticipatory drafting.
Conclusion: Free but Demanding Formalism
The SAS embodies contractual freedom. But that freedom comes with responsibility: to avoid conflicts, anticipate the division of powers, and draft the bylaws with the rigor of a true corporate contract.
To remember:
-
No automatic fallback to SA rules.
-
Precision equals effective governance.
-
No “default rules”: everything must be drafted clearly in the bylaws or carefully aligned shareholder agreements.
Future-proof your SAS structure with meticulous legal drafting.Our experts anticipate governance challenges, harmonize bylaws and shareholder agreements, and craft clauses that protect your interests while preserving operational flexibility in compliance with French corporate law.
